Class Action Challenges Credit Suisse-UBS Merger Terms

A legal startup based in Lausanne, Switzerland, announced its successful fundraising efforts to file a class-action lawsuit aimed at improving the terms of the UBS selling deal for Credit Suisse shareholders.

The merger between Credit Suisse and UBS, Switzerland's largest bank, was orchestrated by Swiss officials out of concern that Credit Suisse's failure in March would have severe repercussions on global financial markets.

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However, the controversial merger resulted in stockholders receiving partial compensation while bondholders lost their entire investments. The unfavorable exchange ratio of 1 UBS share for 22.48 Credit Suisse shares significantly devalued the bank's equity capital, particularly impacting small Credit Suisse shareholders. LegalPass, the legal startup, plans to represent over 350 former Credit Suisse shareholders in what is the first class action suit of its kind in Switzerland.

In the wake of Credit Suisse's March failure, Swiss officials, driven by fears of potential consequences for global financial markets, facilitated a merger between Credit Suisse and UBS. The move aimed to safeguard the stability of Switzerland's banking sector and prevent a potential crisis. However, the terms of the merger drew criticism and sparked dissatisfaction among Credit Suisse shareholders.

One of the main grievances expressed by Credit Suisse shareholders pertains to the disparate treatment of stockholders and bondholders. While stockholders received partial compensation for their investments, bondholders faced substantial losses, losing their entire investments. This imbalance in compensation has drawn considerable scrutiny and intensified the dissatisfaction among the affected shareholders.

The exchange ratio, which valued one UBS share at 22.48 Credit Suisse shares, had a detrimental impact on the equity capital of Credit Suisse. This, in turn, significantly devalued the shares held by small Credit Suisse shareholders. The shares, which had already experienced an 80% decline in value since the beginning of the year, saw their worth further reduced as a result of the merger. This deterioration in shareholder value further exacerbated the concerns and discontent among the affected investors.

LegalPass, a Lausanne-based legal startup founded by two Swiss lawyers, has emerged as the voice for disgruntled Credit Suisse shareholders. With successful fundraising efforts, LegalPass has reached the necessary financing threshold to initiate a class-action lawsuit on behalf of more than 350 former Credit Suisse shareholders. The startup's objective is to provide these shareholders with a platform to voice their concerns and seek redress through the legal system.

Last week, the Swiss pension fund association, Ethos Foundation, added its support to the class-action lawsuit initiated by LegalPass.

The involvement of the Ethos Foundation, a respected organization focused on promoting responsible investment and corporate governance, lends further credibility to the grievances raised by Credit Suisse shareholders.

The outcome of this class-action lawsuit will have significant implications not only for the affected shareholders but also for the broader landscape of shareholder rights and corporate governance in Switzerland.