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ZURICH, April 26 (Reuters) – Switzerland’s Federal Administrative Court has received several hundred claims against the country’s financial regulator FINMA after it wrote off the value of Credit Suisse’s AT1 bonds, the court said on Wednesday.
“We are still receiving many claims every day from lawyers in Switzerland and abroad,” a court spokesman told Reuters.
The court, based in the north-east Swiss city of St. Gallen, declined to say exactly how many claims it has received or the time limit for filing claims.
The bond holders have sued FINMA after their investments were wiped out during last month’s government-orchestrated rescue of Credit Suisse.
Law firm Quinn Emanuel Urquhart & Sullivan, which is representing the bondholders, said on Friday the move was the first step in a battle to seek redress for clients whose assets it said had been expropriated during Credit Suisse’s takeover by bigger rival UBS.
FINMA defended its decision to impose steep losses on some of Credit Suisse bondholders, saying the decision was legally watertight. The government has also defended the decision.
The Quinn Emanuel case is the first major lawsuit in the public domain over the Swiss decision to render around $18 billion of Credit Suisse’s Additional Tier 1 (AT1) debt worthless during the 3 billion Swiss franc all-share rescue deal last month, which stunned markets and alerted litigators.
Under the takeover deal, holders of Credit Suisse AT1 bonds will get nothing, while shareholders, who usually rank below bondholders in compensation terms, will receive $3.23 billion.
Experts have warned the cases could have huge implications for Switzerland.
“If FINMA loses, it would be a disaster for Switzerland’s reputation as a financial centre,” said Peter Viktor Kunz, a professor of business law at the University of Bern said.
“The reputation of the country as a stable place for investors is on the line,” he added. “I doubt this case in St. Gallen will be the end of the matter, and I can see this ultimately being decided by the Federal Supreme Court.” (Reporting by John Revill; editing by John Stonestreet and Louise Heavens)
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