A group of Swiss and international investors representing assets worth over CHF4.5bn are challenging the Swiss Financial Market Supervisory Authority, FINMA, in court for its decision to write down Credit Suisse AT1 Bonds as a result of the takeover by UBS.
The formal complaint against the measure taken by FINMA was filed before the St-Gallen-based Federal Administrative Court on 18 April by law firm Quinn Emanuel Urquhart & Sullivan.
The law firm representing the investors in the court case did not disclose details regarding the plaintiffs.
Thomas Werlen, managing partner at Quinn Emanuel Urquhart & Sullivan in Switzerland, said: “FINMA’s decision undermines international confidence in the legal certainty and reliability of the Swiss financial center. We are committed to rectifying this decision, which is not only in the interests of our clients but will also strengthen Switzerland’s position as a key jurisdiction in the global financial system.”
Richard East, senior partner in the firm’s London office, added: “Tuesday’s filing was the first in a series of steps we will be taking to seek redress for our clients who have been unlawfully deprived of their property rights.”
Pension funds are among the investors that are considering challenging FINMA in court for its decision to write down Credit Suisse’s AT1 bonds.
Migros Pensionskasse (MPK), the pension fund for the Swiss retailer that lost CHF99m (€99.2m) as a result of FINMA’s decision, was also considering the possibility of taking legal action for its losses resulting from the regulator’s measure, chief executive officer Christoph Ryter told IPE.
FINMA justified the order given to Credit Suisse to write down CHF16bn Additional Tier 1 (AT1) capital referring to the Emergency Ordinance to grant extraordinary liquidity assistance loans to Credit Suisse backed by federal guarantees.
The Federal Council’s Emergency Ordinance gave Credit Suisse and UBS access to a liquidity assistance loan with privileged creditor status in bankruptcy for a total amount of up to CHF100bn, and to Credit Suisse a liquidity assistance loan of up to CHF100bn from the Swiss National Bank backed by a federal default guarantee.