US appeals court revives Credit Suisse lawsuit, market swings leads to 96% loss within a day
Credit Suisse Group AG Case - US Court Revives Appeals in Manhattan
A lawsuit accusing Credit Suisse Group AG of causing huge losses was revived by a US appeals court, which involved defrauding investors in a complex product and betting on stock market swings that lost around 96% of its measures in a day.
Another case, in U.S. Circuit Court of Appeals, in Manhattan, said investors may try to prove the company’s intend to collapse the market for its ‘VelocityShares Daily Inverse VIX Short-Term Exchange-Traded Notes’ (“XIV Notes”) just within the15 minutes of its trading with futures contracts.
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The claims of $1.8 billion and $475 million were made by Set Capital LLC and Swiss Bank, in profit at their expense. Last time, Archegos Capital Management sued Credit Suisse after losing $4.7 billion and has been sued over its ties to another client when failed supply chain financier Greensill Capital.
When the Standard & Poor’s 500 dropped by around 4.1% which lead to unexpected market turbulence, XIV notes imploded by punishing investors on betting at low volatility, in Feb 2018.
US circuit court judge, John Walker stated “investors could pursue claims that Credit Suisse manipulated the market for the notes while downplaying the risks in offering documents. The complaint plausibly alleges both motive and opportunity to commit a manipulative act, as well as strong circumstantial evidence of conscious misbehavior or recklessness.” While the Spokesperson Candice Sun, Credit Suisse refused to make any comments.
“We look forward to prosecuting these claims vigorously.” the investors’ lawyer, Michael Eisenkraft, shared to media.
The prices of XIV notes went as low as $4.22, from $108.37, during the collapse. Credit Suisse Group AG later redeemed them at $5.99 each.
U.S. District Judge Analisa Torres, in Manhattan, stated “Credit Suisse had simply taken advantage of market conditions, and was not trying to defraud investors” while dismissing a case in Sept 2019. The appeals court returned this case to District Court Analisa Torres.