Ex-Credit Suisse Leaders Settle Risk Suit for $115 Million

(Bloomberg) — A group of former Credit Suisse Group AG executives and directors led by ex-chairman Urs Rohner agreed to pay $115 million to settle a shareholder suit alleging they failed to maintain adequate risk management, resulting in losses between 2020 and 2021.

The settlement, which was preliminarily approved by a New York judge on Thursday, will be paid to UBS Group AG as the successor to Credit Suisse and will be funded by the insurers of the directors and officers, according to court documents.

“We are pleased that this long-running litigation has been resolved by settlement,” a UBS spokeswoman said in an emailed statement.

The shareholders, led by the Employees Retirement System for the City of Providence, claimed risk management failures let to losses when multiple counterparties defaulted, including Malachite Capital Management, Greensill Capital Management and Archegos Capital Management.

UBS has been working down a list of Credit Suisse-linked litigation ever since it agreed to take over its rival as part of rescue engineered by the Swiss government in 2023. At the time, Credit Suisse was on the verge of collapse following a series of adverse events. It was the largest counterparty of Archegos and ultimately lost more than $5 billion after Bill Hwang’s family office imploded in March 2021.

Rohner left his post as Credit Suisse chairman in April 2021, two years before its ultimate demise.

The Providence pension fund suit was filed as a “derivative claim” by shareholders on behalf of Credit Suisse. As a result, the money, plus any earned interest, goes from the defendants’ insurers to UBS, with a deduction for legal fees to be paid to the investors’ attorneys. Those fees have not been agreed by the parties, but will be disclosed to the court later in the process.

Lawyers for the shareholders told the court the resolution follows three years of “fiercely-contested litigation” in New York, Zurich and Valais, Switzerland, and is the result of mediation that began in May 2023.

The case is Employees Retirement System for the City of Providence v. Rohner, 651657/2022, New York State Supreme Court, New York Co. (Manhattan).

(Updates with UBS statement, details of settlement and background.)

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