Credit Suisse sued over U.S. 'volatility' product losses

NEW YORK (Reuters) – An investor sued Credit Suisse (CSGN.S) on Wednesday, alleging that misstatements about a complex product betting on stock market swings led to losses for people who bought in at inflated prices.

Chief Executive Tidjane Thiam of Swiss bank Credit Suisse awaits a news conference to present the company’s full-year results, in Zurich, Switzerland, February 14, 2018. REUTERS/Moritz Hager

A popular product offered by the bank and linked to expectations of future price swings, or volatility, in the S&P 500 .SPX stock index sank by more than 90 percent over a few hours last month following a stock market selloff.

Credit Suisse later took the product – once worth $1.6 billion and known as the VelocityShares Daily Inverse VIX Short-Term Exchange-Traded Note – off the market.

“The publicly available prospectus accurately and fully disclosed the risks of an investment in XIV, which is only intended for sophisticated institutional clients,” the bank said in a statement emailed to Reuters, referring to the product by its former stock ticker.

“Credit Suisse did not engage in any conduct designed to mislead investors regarding XIV’s value or cause the February 5, 2018, decline in XIV’s price,” the bank said.

The bank’s chief executive, Tidjane Thiam, has said the product was “legitimate” and said investors took their own risks on a trade that did not pan out.

But the investor, in a lawsuit filed in U.S. District Court in Manhattan, said Credit Suisse “manipulated” the notes by liquidating its holdings in various financial products to avoid a loss.

The lawsuit seeks class-action status as well as unspecified damages.

Reporting by Trevor Hunnicutt; Additional reporting by Jonathan Stempel; Editing by Leslie Adler

Filed in: Top News Tags: 

You might like:

Your Money: Who's a good fund? You’re a good fund! Your Money: Who's a good fund? You’re a good fund!
Burnout, stress lead more companies to try a four-day work week Burnout, stress lead more companies to try a four-day work week
Investors sell record $39 billion of stocks in past week: BAML Investors sell record $39 billion of stocks in past week: BAML
Record $46 billion pulled from U.S.-based stock funds in latest week: Lipper Record $46 billion pulled from U.S.-based stock funds in latest week: Lipper
U.S. fund investors pull record $46 billion from stocks in latest week: Lipper U.S. fund investors pull record $46 billion from stocks in latest week: Lipper
Standard Chartered axes over 200 jobs in India: source Standard Chartered axes over 200 jobs in India: source
A higher Social Security retirement age comes with risks for many workers A higher Social Security retirement age comes with risks for many workers
U.S. fund investors compound pain for bond markets U.S. fund investors compound pain for bond markets

Leave a Reply

Submit Comment
© 2018 Stock Investors News. All rights reserved. XHTML / CSS Valid.