By Jonathan Stempel NEW YORK (Reuters) -Nineteen former Credit Suisse executives and directors reached a $115 million settlement of shareholder claims that their poor risk management caused
Credit Suisse Executives Settle for $115 Million Over Risk Mismanagement
By Jonathan Stempel
NEW YORK (Reuters) -Nineteen former Credit Suisse executives and directors reached a $115 million settlement of shareholder claims that their poor risk management caused significant losses in 2020 and 2021, including from Archegos Capital Management, heralding the bank's demise.
A preliminary settlement of the shareholder derivative lawsuit was approved on Thursday by Justice Andrea Masley of a New York state court in Manhattan.
Insurers for the defendants would pay the settlement funds, after deducting legal fees, to Swiss bank UBS, which took over Credit Suisse in 2023 in a government-arranged rescue.
The defendants included former Credit Suisse Chairman Urs Rohner. All denied wrongdoing in agreeing to settle.
Lawyers for Rohner and 12 other defendants did not immediately respond to requests for comment on Friday.
Shareholders said the defendants' negligence violated Swiss law, while leaving Credit Suisse vulnerable as counterparties including Archegos, Greensill Capital Management and Malachite Capital Management defaulted.
The shareholders are led by the Employees Retirement System for the City of Providence, Rhode Island. Their lawyers plan to seek up to 30% of the settlement fund for legal fees, plus up to $3.2 million for expenses.
Last month, a federal judge in Manhattan said UBS must face two lawsuits by former Credit Suisse shareholders and bondholders who said Credit Suisse defrauded them with false and misleading statements about its financial condition.
The same judge dismissed a separate shareholder lawsuit in February 2024 against 29 former Credit Suisse officials and the auditor KPMG, blaming two decades of "continuous mismanagement" for Credit Suisse's collapse.
Archegos, a family office that once managed $36 billion, imploded in March 2021 when founder Bill Hwang could not meet margin calls on bank loans he obtained to make large bets on media and technology stocks.
Hwang is appealing his July 2024 fraud conviction and 18-year prison sentence.
The case is Employees Retirement System for the City of Providence v Rohner et al, New York State Supreme Court, New York County, No. 651657/2022.
(Reporting by Jonathan Stempel in New York; Editing by Richard Chang)
