Pimco weighs joining investors suing over Credit Suisse wipeout
PACIFIC Investment Management (Pimco) is considering joining hundreds of investors in challenging the Swiss regulator’s decision to wipe out about US$17 billion of Credit Suisse Group bonds following the bank’s takeover by UBS Group.
Pimco, which filed a suit against Finma in order to meet an early May deadline for such submissions, has not yet joined any of the bondholder groups, according to a person familiar with the situation.
The firm is weighing whether to potentially pursue legal action to recoup some of its US$800 million of Credit Suisse’s so-called Additional Tier 1 (AT1) bonds, according to people familiar with the matter. Those bonds were written down to zero after the acquisition and the Newport Beach, California-based asset manager was among the largest holders of the bonds.
Bondholders have argued the writedown was an unfair and disproportionate move that put shareholders before bondholders. Defenders of Finma’s decision point out that the risk of a writedown was laid out in the bonds documents.
The Swiss Federal Administrative Court has said it has received around 230 appeals, involving roughly 2,500 claimants, against the Mar 19 writedown.
Law firm Pallas Partners, which filed a suit in April, is seeking full compensation for its clients, which as of early May included 90 institutional investors and asset managers with US$1.35 billion in AT1 bonds, as well as 700 retail and family office clients accounting for some US$300 million.
Quinn Emanuel Urquhart & Sullivan filed in April and has now amassed more than 1,000 clients, including institutional investors, that held around US$6 billion in the bonds. Besides these, at least three other complaints have been filed. BLOOMBERG
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