US shareholders are suing Credit Suisse for giving false and misleading public statements and downplaying the impact of its losses, in the latest knock to the beleaguered bank.
The Rosen Law Firm, a global investor rights law firm, filed a class action lawsuit in New Jersey against the Swiss banking giant on behalf of investors.
It comes in the same week that the lender agreed to borrow up to 50 billion Swiss francs (£45 billion) from the Swiss National Bank, after watching its share price plunge by around 30% on Wednesday.
The lawsuit accuses Credit Suisse of making false and misleading public statements, and failing to disclose important information about the volume of customers withdrawing money from the bank late last year.
The bank did not disclose that “the sharp increase in customer outflows Credit Suisse began experiencing in October 2022 remained ongoing”, the lawsuit read.
It went on: “Accordingly, Credit Suisse had downplayed the impact of the company’s recent series of quarterly losses and risk and compliance failures on liquidity and its ability to retain client funds.”
On Tuesday, Credit Suisse admitted in its annual report that it had found “material weaknesses” in its internal controls over financial reporting, meaning it failed to to identify risks it should have.
As a result, it concluded that its disclosure controls and procedures at the end of last year were not effective.
The bank also revealed that it sustained 123 million Swiss francs (£109 million) in asset outflows over 2022, as customers withdrew funds.
It helped drag down the group’s total net loss to 7.3 billion Swiss francs (£6.5 billion) for the year.
It admitted it had suffered “reputational harm” from the outflow of deposits and assets under management, which it insisted was concentrated in October last year and had begun to moderate since.
But the investors suing Credit Suisse accuse it of overstating its financial position and prospects and downplaying the impact of the losses it incurred.
“As a result, the company’s public statements were materially false and misleading at all relevant times”, it concluded.
The law firm, which focuses on representing shareholders, said other investors can join the class action by contacting its lawyers.
Credit Suisse declined to comment on the lawsuit.
Rosen Law Firm filed a lawsuit against the US’s Silicon Valley Bank which collapsed at the end of last week, for misleading shareholders about its susceptibility to a bank run as a result of high interest rates.
It is also investigating potential claims on behalf of shareholders of US regional bank First Republic Bank, which saw its share price plunge by more than two thirds during the day on Monday.