A bid by Credit Suisse Group to dismiss a class-action securities lawsuit brought by several pension funds was denied Wednesday by U.S. District Court Judge Lorna Schofield in New York.
The class action was filed by the City of Birmingham Firemen's and Policemen's Supplemental Pension System, International Brotherhood of Teamsters Local No. 710 Pension Plan, Mokena, Ill., and other purchasers of Credit Suisse American Depository Receipts on the New York Stock Exchange from March 20, 2015 to Feb. 3, 2016.
The complaint alleges that Credit Suisse misrepresented its trading and risk-limit controls and that they were increased to allow it to accumulate nearly $3 billion in distressed debt and U.S. collateralized loan obligations that later proved to be difficult to liquidate. A subsequent disclosure by Credit Suisse of a $633 million write-down related to the sale of those positions led to an 11% stock drop, the plaintiffs allege.
Ms. Schofield said in her ruling that the allegations "are sufficient to plead loss causation."
Carol Gilden, partner at Cohen Milstein Sellers & Toll, the plaintiffs' co-lead counsel, said the case is about Credit Suisse misleading investors and "skirting many of the very controls designed to prevent risky investments. We look forward to continuing to vigorously pursue justice for shareholders wronged by the bank's behavior."
The case is City of Birmingham Firemen's and Policemen's Supplemental Pension System vs. Credit Suisse Group AG, et al.