UBS faces new class action

UBS faces new class action
Even as the bank removes Credit Suisse nameplates, more legal storm clouds roll in.
AUG 14, 2023

Zurich's commercial court is set to witness another lawsuit against UBS's contentious acquisition of Credit Suisse. This fresh challenge is spearheaded by the Swiss Investor Protection Association, representing approximately 500 Credit Suisse equity investors, and is expected to be lodged Monday.

These investors, including numerous ex-employees of the beleaguered bank, endured significant losses when UBS stepped in to salvage Credit Suisse earlier this year.

“The SASV’s action under Art. 105 of the Merger Act deals with the question of whether the share and membership rights of CS shareholders were adequately safeguarded in the context of the takeover of CS by UBS. CS shareholders received only one UBS share for every 22.48 CS shares,” the association said.

Swiss authorities had choreographed this takeover, barring shareholders from both banking giants to cast their vote on the transaction. The acquisition price of $3.4 billion by UBS was significantly lower than Credit Suisse's market value the day prior to the deal's finalization, much less than its actual book value.

This lawsuit isn’t the first against UBS regarding this acquisition; shareholders had previously lodged a class action, with bondholders also taking legal action.

In a significant development last week, UBS declared that government backing for this acquisition was no longer required, a move tat was probably designed to temper public dissatisfaction ahead of the forthcoming October national elections.

Arik Röschke, the general secretary of the SASV, commented on the looming case that is set to be filed under the Swiss Merger Act. He hinted at a possible out-of-court settlement, emphasizing the colossal compensation UBS might have to shell out if the court favors the shareholders. Referring to the acquisition, Röschke said, "UBS procured one of Europe's most financially robust banks in a fire sale."

The plaintiffs hail from across the globe including the UK, U.S., Germany, Austria, Thailand, Dubai and of course, Switzerland. Many are ex-employees of Credit Suisse, holding shares given as part of their compensation packages. Röschke emphasized their plight, pointing out that some who held shares valued at over SFr80 about a decade and a half ago received a meager SFr0.76 per share through the UBS takeover deal.

Niedermann Rechtsanwälte, a Swiss law firm, has been appointed to champion this lawsuit. Meanwhile, UBS has refrained from commenting on the situation.

This legal claim mirrors another filed by Lausanne’s LegalPass, with the backing of the Ethos Foundation, representing institutional investors of both banks. Separate law firms are also representing bondholders aggrieved by the controversial nullification of $17 billion of securities as part of the deal.

In the U.S., attorneys are scrutinizing potential cases against individual ex-managers of Credit Suisse, holding them accountable for the bank's misfortunes.

Latest News

Advisor moves: RBC lands $1B UBS team in Pittsburgh
Advisor moves: RBC lands $1B UBS team in Pittsburgh

Elsewhere, Wells Fargo Advisors adds a $400 million Morgan Stanley veteran in Naples as an ex-Cetera advisor goes independent with LPL

GWG’s Heppner hires Puff Daddy’s attorneys as criminal sentencing looms
GWG’s Heppner hires Puff Daddy’s attorneys as criminal sentencing looms

According to a federal charges Bradley Heppner, 60, received more than $150 million in payments through funneling money from GWG Holdings to a shell company.

Investors accuse Broadstreet fund of alleged billion-dollar 'Ponzi-like' scheme
Investors accuse Broadstreet fund of alleged billion-dollar 'Ponzi-like' scheme

A $1B fund allegedly skimmed 30% off the top, then swapped cash for locked-up stock.

Lawsuit alleges Skechers founders manipulated $9.4B buyout to shortchange investors
Lawsuit alleges Skechers founders manipulated $9.4B buyout to shortchange investors

Insiders allegedly rewrote projections three times in four days.

Fintech bytes: FINNY signs Visionary Square for pay-as-you-go AI prospecting program
Fintech bytes: FINNY signs Visionary Square for pay-as-you-go AI prospecting program

TCI Wealth Advisors also has also tapped JIFFYAI to unify onboarding and servicing, while TradePMR adds ICE market data to its Fusion advisor platform

SPONSORED Built on insurance experience to deliver on long-term promises

Knighthead Life entered the market with a competitive MYGA. A strong launch earned advisor confidence and paved the way for FIAs.

SPONSORED In the Age of AI, Trust Becomes the Advisor's Greatest Asset

As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor