WongPartnership in talks with over 40 Credit Suisse AT1 bondholders to launch new suit

LAW firm WongPartnership is in talks with more than 40 holders of Credit Suisse Additional Tier-1 (AT1) bonds, to represent them in a collective action against the Swiss government.

They are seeking to bring forth an “investor treaty case”, which argues that the Swiss government’s decision to write off the bonds breached agreed-upon protections afforded to Singapore investors under the EFTA-Singapore Free Trade Agreement.

Short for the European Free Trade Association, EFTA is a group of countries comprising Switzerland, Iceland, Liechtenstein and Norway.

WongPartnership partner and senior counsel Koh Swee Yen told The Business Times (BT) on Monday (May 29) that the group is also seeking third-party financing for the action. There are some interested parties, but none have officially committed.

Third-party funders are not unusual in international arbitration cases. They fund the legal costs and expenses of cross-border litigation and, depending on the terms of the agreement, take a percentage of the funds recovered or a multiple of what was spent on the case.

Koh said she hopes funding will be finalised in the next few months, and if so, investors will not have to pay legal fees associated with the suit.

The firm’s potential clients are accredited investors who are Singaporeans or permanent residents, as well as Singapore-incorporated family offices. Most bought the bonds after being introduced to them by various private bankers, Koh said. 

The latest move adds to a growing number of legal actions in Singapore against the Swiss government.

Last month, BT reported that international law firm Withers was also seeking to represent close to 100 investors based in Singapore and the region. Withers’ clients comprise both accredited investors and high-net-worth individuals, representing an aggregated claim sum of up to S$100 million.

Drew & Napier lawyer Mahesh Rai also told BT at the time that he was speaking with about 100 investors in Asia who were seeking to file a treaty claim against the Swiss government.

Switzerland’s Federal Administrative Court said last week that it has received 230 claims against the country’s financial regulator, Finma. Reuters reported that these claims relate to 2,500 individual parties. 

AT1 bondholders were left holding a pile of worthless notes when Finma instructed Credit Suisse to write down its AT1 debt, following the lender’s takeover by UBS. The move meant that bondholders, who traditionally rank above shareholders, would receive no return on their investments. Credit Suisse shareholders, on the other hand, would receive UBS shares.