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Litigation, regulatory and similar matters
 6 Months Ended
Jun. 30, 2023
Disclosure Of Litigation Regulatory And Similar Matters [Line Items]  
Disclosure Of Contingent Liabilities Explanatory
Note 15
 
Provisions and contingent liabilities
 
(continued)
b) Litigation, regulatory and similar matters
The Group operates in
 
a legal and regulatory
 
environment that exposes it to
 
significant litigation and similar risks
arising from
 
disputes and regulatory
 
proceedings. As a
 
result, UBS (which
 
for purposes of
 
this Note
 
may refer to
UBS
 
Group
 
AG
 
and/or
 
one
 
or
 
more
 
of
 
its
 
subsidiaries,
 
as
 
applicable)
 
is
 
involved
 
in
 
various
 
disputes
 
and
 
legal
proceedings, including litigation, arbitration,
 
and regulatory and criminal investigations.
Such matters are subject
 
to many uncertainties,
 
and the outcome and the
 
timing of resolution are
 
often difficult to
predict,
 
particularly in
 
the
 
earlier
 
stages
 
of
 
a
 
case.
 
There
 
are
 
also
 
situations
 
where
 
the Group
 
may
 
enter into
 
a
settlement
 
agreement.
 
This
 
may
 
occur
 
in
 
order
 
to
 
avoid
 
the
 
expense,
 
management
 
distraction
 
or
 
reputational
implications of
 
continuing to
 
contest liability,
 
even
 
for those
 
matters for
 
which
 
the Group
 
believes it
 
should be
exonerated. The uncertainties inherent in all such matters affect the amount and timing of any potential outflows
for both matters
 
with respect to
 
which provisions have
 
been established and
 
other contingent liabilities.
 
The Group
makes
 
provisions
 
for
 
such
 
matters
 
brought
 
against
 
it
 
when,
 
in
 
the
 
opinion
 
of
 
management
 
after
 
seeking legal
advice, it
 
is more
 
likely than
 
not that
 
the Group
 
has a
 
present legal
 
or constructive obligation
 
as a
 
result of
 
past
events, it
 
is probable
 
that an
 
outflow of
 
resources will
 
be required,
 
and the
 
amount can
 
be reliably
 
estimated. Where
these factors
 
are
 
otherwise satisfied,
 
a
 
provision may
 
be
 
established for
 
claims that
 
have
 
not
 
yet been
 
asserted
against the
 
Group, but
 
are nevertheless
 
expected to
 
be, based
 
on
 
the Group’s
 
experience with
 
similar
 
asserted
claims.
 
If
 
any
 
of
 
those
 
conditions
 
is
 
not
 
met,
 
such
 
matters
 
result
 
in
 
contingent
 
liabilities.
 
If
 
the
 
amount
 
of
 
an
obligation cannot
 
be reliably
 
estimated, a
 
liability exists
 
that is
 
not recognized
 
even if
 
an outflow
 
of resources
 
is
probable. Accordingly, no
 
provision is
 
established even if
 
the potential
 
outflow of resources
 
with respect
 
to such
matters could be significant. Developments relating to a matter that occur after the relevant reporting period, but
prior
 
to
 
the
 
issuance
 
of
 
financial
 
statements, which
 
affect
 
management’s assessment
 
of
 
the
 
provision
 
for
 
such
matter
 
(because,
 
for
 
example,
 
the
 
developments provide
 
evidence of
 
conditions that
 
existed
 
at
 
the
 
end
 
of
 
the
reporting
 
period),
 
are
 
adjusting
 
events
 
after
 
the
 
reporting period
 
under
 
IAS
 
10
 
and
 
must
 
be
 
recognized in
 
the
financial statements for the reporting period.
Specific litigation, regulatory and other matters are
 
described below, including all such matters that
 
management
considers to be material and others that management believes to be of significance to the Group due to potential
financial,
 
reputational
 
and
 
other
 
effects.
 
The
 
amount
 
of
 
damages
 
claimed,
 
the
 
size
 
of
 
a
 
transaction
 
or
 
other
information is
 
provided where
 
available and
 
appropriate in order
 
to assist
 
users in
 
considering the
 
magnitude of
potential exposures.
In the case of certain matters below, we state that we have established a provision, and for the other matters, we
make no such statement. When we
 
make this statement and we expect
 
disclosure of the amount of a provision
 
to
prejudice seriously our
 
position with other
 
parties in the
 
matter because it
 
would reveal what
 
UBS believes to
 
be
the
 
probable
 
and
 
reliably estimable
 
outflow, we
 
do
 
not
 
disclose
 
that amount.
 
In
 
some
 
cases we
 
are
 
subject to
confidentiality obligations
 
that preclude
 
such disclosure.
 
With respect
 
to the
 
matters for
 
which we
 
do not
 
state
whether we have
 
established a provision,
 
either: (a) we
 
have not established
 
a provision; or
 
(b) we have
 
established
a provision
 
but expect
 
disclosure of
 
that fact
 
to prejudice
 
seriously our
 
position with
 
other parties
 
in the
 
matter
because it would reveal the fact that
 
UBS believes an outflow of resources to be probable
 
and reliably estimable.
With respect to certain litigation, regulatory
 
and similar matters for which we
 
have established provisions, we are
able to
 
estimate the expected
 
timing of outflows.
 
However, the aggregate
 
amount of the
 
expected outflows for
those matters for which we
 
are able to estimate expected
 
timing is immaterial relative to
 
our current and expected
levels of liquidity over the relevant time periods.
The
 
aggregate
 
amount
 
provisioned
 
for
 
litigation,
 
regulatory
 
and
 
similar
 
matters
 
as
 
a
 
class
 
is
 
disclosed
 
in
 
the
“Provisions”
 
table
 
in
 
Note
 
15a
 
above. It
 
is
 
not
 
practicable
 
to
 
provide
 
an
 
aggregate
 
estimate
 
of
 
liability
 
for
 
our
litigation, regulatory
 
and similar
 
matters as
 
a class
 
of contingent
 
liabilities beyond
 
what has
 
been identified
 
as a
consequence of
 
the acquisition
 
of Credit
 
Suisse as
 
set out
 
below. Doing
 
so would
 
require UBS
 
to provide
 
speculative
legal assessments as to claims and proceedings that involve unique fact patterns or novel legal theories, that have
not yet
 
been initiated
 
or are
 
at early
 
stages of
 
adjudication,
 
or as
 
to which
 
alleged damages
 
have not
 
been quantified
by the claimants. Although
 
UBS therefore cannot provide a
 
numerical estimate of the
 
future losses that could arise
from litigation,
 
regulatory and
 
similar matters,
 
UBS believes
 
that the
 
aggregate amount
 
of possible
 
future losses
from this class that are more than remote substantially
 
exceeds the level of current provisions.
Litigation, regulatory
 
and similar
 
matters may
 
also result
 
in non-monetary
 
penalties and
 
consequences. A
 
guilty plea
to, or conviction of, a crime could have material consequences for UBS. Resolution of regulatory proceedings may
require UBS to obtain waivers of regulatory disqualifications to maintain certain operations, may entitle regulatory
authorities to limit, suspend or terminate
 
licenses and regulatory authorizations, and may
 
permit financial market
utilities to
 
limit, suspend
 
or terminate
 
UBS’s participation
 
in such
 
utilities. Failure
 
to obtain
 
such waivers,
 
or any
limitation, suspension
 
or termination
 
of licenses,
 
authorizations or
 
participations, could
 
have material
 
consequences
for UBS.
The
 
risk
 
of
 
loss
 
associated with
 
litigation, regulatory
 
and
 
similar matters
 
is
 
a
 
component of
 
operational risk
 
for
purposes of determining
 
capital requirements.
 
Information concerning
 
our capital requirements
 
and the calculation
of operational risk for this purpose is included
 
in the “Capital management” section
 
of this report.
Matters related
 
to Credit
 
Suisse entities
 
are separately
 
described herein
 
and in
 
the breakdown
 
of provisions
 
and
contingent liabilities
 
for litigation
 
regulatory and
 
similar matters
 
below. The
 
amounts shown
 
in
 
the table
 
below
reflect the provisions
 
recorded by the relevant
 
Credit Suisse entities
 
under IFRS accounting principles.
 
In connection
with the acquisition
 
of Credit
 
Suisse, UBS
 
Group AG additionally
 
has reflected
 
in its purchase
 
accounting under
 
IFRS
3 a further valuation adjustment of USD
3
bn reflecting an estimate of outflows relating
 
to contingent liabilities for
all present obligations included in the scope of the acquisition at fair value upon closing,
 
even if it is not probable
that
 
they
 
will
 
result
 
in
 
an
 
outflow
 
of
 
resources,
 
significantly
 
increasing
 
the
 
recognition
 
threshold
 
for
 
litigation
liabilities beyond those that generally apply
 
under IFRS and US GAAP.
 
 
 
 
 
 
 
 
 
 
Provisions for litigation, regulatory and similar matters
 
by business division, in Group Functions
 
and in Credit Suisse
1
USD m
Global Wealth
Manage-
ment
Personal &
Corporate
Banking
Asset
Manage-
ment
Investment
Bank
Group
Functions
Credit
 
Suisse
Total
Balance as of 31 December 2022
1,182
159
8
308
928
2,586
Balance as of 31 March 2023
1,193
161
8
351
1,594
3,306
Provisions recognized upon acquisition of Credit Suisse
2,838
2,838
Increase in provisions recognized in the income statement
35
0
1
20
0
14
70
Release of provisions recognized in the income statement
(1)
0
0
0
0
0
(1)
Provisions used in conformity with designated purpose
(37)
0
(1)
(45)
0
(7)
(90)
Foreign currency translation / unwind of discount
7
1
0
1
1
(8)
2
Balance as of 30 June 2023
1,196
162
8
327
1,595
2,837
6,126
1 Provisions, if any, for the matters described in item 3 of this Note are recorded in Global Wealth Management, and provisions,
 
if any, for the matters described in item 2 are recorded in Group Functions. Provisions,
if any, for
 
the matters described
 
in items 1 and
 
5 of this Note
 
are allocated between Global
 
Wealth Management and
 
Personal & Corporate
 
Banking; and provisions,
 
if any, for
 
the matters described in item
 
4 are
allocated between the Investment Bank and Group Functions.
Litigation, regulatory and similar matters
 
involving UBS AG and subsidiaries
1. Inquiries regarding cross-border wealth management
 
businesses
Tax
 
and regulatory
 
authorities in
 
a number
 
of countries
 
have made
 
inquiries, served
 
requests for
 
information or
examined
 
employees
 
located
 
in
 
their
 
respective
 
jurisdictions
 
relating
 
to
 
the
 
cross-border
 
wealth
 
management
services provided by UBS and other financial institutions.
Since 2013, UBS
 
(France) S.A., UBS AG
 
and certain former employees
 
have been under investigation in
 
France in
relation to UBS’s cross-border business with French
 
clients. In connection with this investigation, the investigating
judges ordered UBS AG to provide bail (“
caution
”) of EUR
1.1
bn.
In 2019,
 
the court
 
of first
 
instance returned a
 
verdict finding UBS
 
AG guilty
 
of unlawful solicitation
 
of clients on
French territory and aggravated
 
laundering of the proceeds
 
of tax fraud, and UBS
 
(France) S.A. guilty of aiding
 
and
abetting unlawful
 
solicitation and of
 
laundering the
 
proceeds of
 
tax fraud.
 
The court
 
imposed fines
 
aggregating
EUR
3.7
bn on UBS AG and UBS (France) S.A. and awarded EUR
800
m of civil damages to the French state. A trial
in the French Court of Appeal took
 
place in March 2021. In December 2021, the
 
Court of Appeal found UBS AG
guilty of unlawful solicitation and aggravated laundering of the proceeds of tax fraud. The court ordered a fine of
EUR
3.75
m, the confiscation
 
of EUR
1
bn, and awarded
 
civil damages to
 
the French state
 
of EUR
800
m. UBS AG
has filed an appeal with the French Supreme Court. A hearing in the
 
Supreme Court is currently scheduled for 27
September 2023. The fine
 
and confiscation imposed by
 
the Court of Appeal are
 
suspended during the
 
appeal. The
civil damages award has been paid to the French
 
state (EUR
99
m of which was deducted from the bail),
 
subject to
the result of UBS’s appeal.
Our balance sheet
 
at 30 June
 
2023 reflected
 
provisions with
 
respect to
 
this matter
 
in an amount
 
of EUR
1.1
bn (USD
1.2
bn). The
 
wide range of
 
possible outcomes in
 
this case
 
contributes to a
 
high degree of
 
estimation uncertainty
and the
 
provision reflects
 
our best
 
estimate of
 
possible financial
 
implications, although
 
actual penalties
 
and civil
damages could exceed (or may be less than)
 
the provision amount.
2. Claims related to sales of residential mortgage-backed
 
securities and mortgages
From 2002
 
through 2007,
 
prior to
 
the crisis
 
in the
 
US residential
 
loan market,
 
UBS was
 
a substantial
 
issuer and
underwriter of US residential mortgage-backed securities (RMBS) and was a
 
purchaser and seller of US residential
mortgages.
 
In 2018,
 
the DOJ
 
filed a
 
civil complaint
 
in the
 
District Court
 
for the
 
Eastern District
 
of New
 
York. The
 
complaint
seeks unspecified civil monetary
 
penalties under the
 
Financial Institutions Reform, Recovery and
 
Enforcement Act
of 1989 related to UBS’s issuance, underwriting and sale of 40 RMBS transactions in 2006
 
and 2007. UBS moved
to dismiss the
 
civil complaint in 2019.
 
Later in 2019, the
 
district court denied UBS’s
 
motion to dismiss. In
 
August
2023, UBS reached a settlement
 
with the DOJ, under
 
which UBS paid USD
1.435
bn to resolve all civil
 
claims by the
DOJ.
Our
 
balance sheet
 
at 30
 
June
 
2023 reflected
 
a
 
provision with
 
respect to
 
matters described
 
in
 
this
 
item 2
 
in
 
an
amount that UBS believed to be appropriate
 
under the applicable accounting standard.
3. Madoff
In relation to
 
the Bernard
 
L. Madoff Investment
 
Securities LLC
 
(BMIS) investment
 
fraud, UBS
 
AG, UBS (Luxembourg)
S.A. (now UBS
 
Europe SE, Luxembourg
 
branch) and certain
 
other UBS subsidiaries have
 
been subject to
 
inquiries
by a
 
number of
 
regulators, including
 
the Swiss
 
Financial Market
 
Supervisory Authority
 
(FINMA) and
 
the Luxembourg
Commission
 
de
 
Surveillance
 
du
 
Secteur
 
Financier.
 
Those
 
inquiries
 
concerned
 
two
 
third-party
 
funds
 
established
under Luxembourg
 
law,
 
substantially all
 
assets of
 
which were
 
with BMIS,
 
as well
 
as certain
 
funds established
 
in
offshore
 
jurisdictions
 
with
 
either
 
direct
 
or
 
indirect
 
exposure
 
to
 
BMIS.
 
These
 
funds
 
faced
 
severe
 
losses,
 
and
 
the
Luxembourg funds are in liquidation. The documentation establishing both funds identifies UBS entities in various
roles,
 
including custodian,
 
administrator,
 
manager,
 
distributor and
 
promoter,
 
and indicates
 
that UBS
 
employees
serve as board members.
In 2009 and 2010, the liquidators
 
of the two Luxembourg funds
 
filed claims against UBS entities,
 
non-UBS entities
and certain individuals, including
 
current and former UBS employees,
 
seeking amounts totaling approximately
 
EUR
2.1
bn, which
 
includes amounts
 
that the
 
funds may
 
be held
 
liable to
 
pay the
 
trustee for
 
the liquidation
 
of BMIS
(BMIS Trustee).
A large number of alleged beneficiaries have filed claims against
 
UBS entities (and non-UBS entities) for purported
losses relating to
 
the Madoff fraud.
 
The majority of
 
these cases have
 
been filed in
 
Luxembourg, where decisions
that the claims in eight test cases were inadmissible have been affirmed by the Luxembourg Court of Appeal, and
the Luxembourg Supreme Court has dismissed
 
a further appeal in one of the test
 
cases.
In the
 
US, the
 
BMIS Trustee
 
filed claims
 
against UBS
 
entities, among
 
others, in
 
relation to
 
the two
 
Luxembourg
funds and one of
 
the offshore funds. The
 
total amount claimed against
 
all defendants in
 
these actions was
 
not less
than USD
2
bn. In
 
2014, the
 
US Supreme
 
Court rejected
 
the BMIS
 
Trustee’s motion for
 
leave to
 
appeal decisions
dismissing all
 
claims except
 
those for
 
the recovery
 
of approximately
 
USD
125
m of
 
payments alleged
 
to be
 
fraudulent
conveyances
 
and
 
preference
 
payments.
 
In
 
2016,
 
the
 
bankruptcy
 
court
 
dismissed
 
these
 
claims
 
against
 
the
 
UBS
entities. In 2019,
 
the Court of Appeals
 
reversed the dismissal of
 
the BMIS Trustee’s remaining
 
claims, and the US
Supreme Court
 
subsequently denied
 
a petition seeking
 
review of the
 
Court of Appeals’
 
decision. The case
 
has been
remanded to the Bankruptcy Court for further
 
proceedings.
4. Foreign exchange, LIBOR and benchmark rates,
 
and other trading practices
Foreign exchange-related regulatory matters:
 
Beginning in 2013, numerous authorities commenced investigations
concerning possible
 
manipulation of
 
foreign
 
exchange markets
 
and
 
precious
 
metals prices.
 
As
 
a
 
result
 
of these
investigations,
 
UBS
 
entered
 
into
 
resolutions
 
with
 
Swiss,
 
US
 
and
 
United
 
Kingdom
 
regulators
 
and
 
the
 
European
Commission. UBS
 
was granted
 
conditional immunity
 
by the Antitrust
 
Division of
 
the DOJ
 
and by
 
authorities in
 
other
jurisdictions
 
in
 
connection
 
with
 
potential
 
competition
 
law
 
violations
 
relating
 
to
 
foreign
 
exchange
 
and
 
precious
metals businesses.
Foreign exchange-related civil litigation:
 
Putative class actions have been filed since 2013 in US federal
 
courts and
in other jurisdictions against
 
UBS and other banks on
 
behalf of putative classes of
 
persons who engaged in foreign
currency transactions with any of the defendant banks. UBS has resolved US federal court class actions relating to
foreign currency transactions with
 
the defendant banks
 
and persons who
 
transacted in foreign
 
exchange futures
contracts and options on such futures
 
under a settlement agreement that
 
provides for UBS to pay an aggregate
 
of
USD
141
m and
 
provide cooperation
 
to the
 
settlement classes.
 
Certain class
 
members have
 
excluded themselves
from that
 
settlement
 
and have
 
filed individual
 
actions in
 
US and
 
English courts
 
against
 
UBS and
 
other banks,
 
alleging
violations of
 
US and
 
European competition laws
 
and unjust
 
enrichment. UBS
 
and the
 
other banks
 
have resolved
those individual matters.
In
 
2015, a
 
putative
 
class action
 
was filed
 
in
 
federal court
 
against UBS
 
and numerous
 
other banks
 
on
 
behalf of
persons and
 
businesses in
 
the US
 
who directly
 
purchased foreign
 
currency from
 
the defendants
 
and alleged
 
co-
conspirators for
 
their own
 
end use.
 
In 2022,
 
the court
 
denied plaintiffs’
 
motion for
 
class certification.
 
In March
2023, the court granted defendants’ summary
 
judgment motion, dismissing the case. Plaintiffs
 
have appealed.
LIBOR and other benchmark-related regulatory
 
matters:
 
Numerous government agencies conducted investigations
regarding potential improper attempts by UBS, among others, to manipulate LIBOR and other benchmark rates at
certain times. UBS reached settlements or otherwise concluded investigations relating to benchmark interest rates
with the investigating authorities. UBS
 
was granted conditional leniency or
 
conditional immunity from authorities
in certain jurisdictions,
 
including the Antitrust
 
Division of the DOJ
 
and the Swiss Competition
 
Commission (WEKO),
in connection with potential antitrust or competition law violations related to certain rates. However, UBS has not
reached a final settlement with WEKO, as the
 
Secretariat of WEKO has asserted that UBS does
 
not qualify for full
immunity.
LIBOR and
 
other benchmark-related
 
civil litigation:
 
A number
 
of putative
 
class actions
 
and other
 
actions are
 
pending
in the federal
 
courts in New
 
York against UBS
 
and numerous other
 
banks on behalf
 
of parties who
 
transacted in
certain interest rate benchmark-based derivatives. Also
 
pending in the US
 
and in other jurisdictions are
 
a number
of other
 
actions asserting losses
 
related to
 
various products whose
 
interest rates were
 
linked to
 
LIBOR and other
benchmarks, including
 
adjustable rate
 
mortgages, preferred
 
and debt securities,
 
bonds pledged
 
as collateral, loans,
depository
 
accounts,
 
investments
 
and
 
other
 
interest-bearing
 
instruments.
 
The
 
complaints
 
allege
 
manipulation,
through
 
various
 
means,
 
of
 
certain
 
benchmark
 
interest
 
rates,
 
including
 
USD LIBOR,
 
Euroyen
 
TIBOR,
 
Yen
 
LIBOR,
EURIBOR,
 
CHF LIBOR,
 
GBP
 
LIBOR
 
and
 
seek
 
unspecified
 
compensatory
 
and
 
other
 
damages
 
under
 
varying
 
legal
theories.
USD LIBOR class
 
and individual
 
actions in
 
the US:
In 2013
 
and 2015,
 
the district
 
court in
 
the USD LIBOR
 
actions
dismissed, in whole or in
 
part, certain plaintiffs’ antitrust
 
claims, federal racketeering claims,
 
Commodity Exchange
Act claims, and state common law
 
claims, and again dismissed the
 
antitrust claims in 2016 following
 
an appeal. In
2021, the
 
Second Circuit affirmed
 
the district court’s
 
dismissal in part
 
and reversed in
 
part and remanded
 
to the
district
 
court
 
for
 
further
 
proceedings.
 
The
 
Second
 
Circuit,
 
among
 
other
 
things,
 
held
 
that
 
there
 
was
 
personal
jurisdiction over
 
UBS and
 
other foreign
 
defendants.
 
Separately, in
 
2018, the
 
Second Circuit
 
reversed in
 
part the
district court’s
 
2015 decision
 
dismissing certain
 
individual plaintiffs’
 
claims and
 
certain of
 
these actions
 
are now
proceeding. In 2018, the district court
 
denied plaintiffs’ motions for class certification in
 
the USD class actions for
claims pending
 
against UBS,
 
and plaintiffs
 
sought permission
 
to appeal
 
that ruling
 
to the
 
Second Circuit.
 
The Second
Circuit denied the petition
 
to appeal. In
 
2020, an individual action
 
was filed in
 
the Northern District of
 
California
against UBS and numerous other banks alleging that the
 
defendants conspired to fix the interest rate used as
 
the
basis for
 
loans to
 
consumers by jointly
 
setting the USD LIBOR
 
rate and
 
monopolized the market
 
for LIBOR-based
consumer
 
loans
 
and
 
credit
 
cards.
 
In
 
September
 
2022,
 
the
 
court
 
granted
 
defendants’
 
motion
 
to
 
dismiss
 
the
complaint in its
 
entirety, while allowing plaintiffs
 
the opportunity to file
 
an amended complaint. Plaintiffs
 
filed an
amended complaint in October 2022, and defendants
 
have moved to dismiss the amended complaint.
Other benchmark class actions in the US:
 
Yen
 
LIBOR / Euroyen TIBOR
– In 2017, the court dismissed one Yen LIBOR / Euroyen TIBOR action in its entirety on
standing grounds. In
 
2020, the appeals
 
court reversed the
 
dismissal and, subsequently, plaintiffs
 
in that action
 
filed
an amended complaint
 
focused on Yen
 
LIBOR. In 2022,
 
the court granted
 
UBS’s motion for
 
reconsideration and
dismissed the case against UBS. The dismissal of the case against UBS could be appealed following
 
the disposition
of the case against the remaining defendant in the
 
district court.
CHF LIBOR
 
– In 2017, the court
 
dismissed the CHF LIBOR action on standing
 
grounds and failure to state a
 
claim.
Plaintiffs
 
filed
 
an
 
amended
 
complaint,
 
and
 
the
 
court
 
granted
 
a
 
renewed
 
motion
 
to
 
dismiss
 
in
 
2019.
 
Plaintiffs
appealed. In
 
2021, the
 
Second Circuit
 
granted the
 
parties’ joint
 
motion to
 
vacate the
 
dismissal and
 
remand the
 
case
for further
 
proceedings. Plaintiffs
 
filed a
 
third amended
 
complaint in
 
November 2022
 
and defendants
 
moved to
dismiss the amended complaint in January
 
2023.
EURIBOR
 
–
 
In
 
2017,
 
the
 
court
 
in
 
the
 
EURIBOR
 
lawsuit
 
dismissed
 
the
 
case
 
as
 
to
 
UBS
 
and
 
certain
 
other
 
foreign
defendants for lack of personal jurisdiction.
 
Plaintiffs have appealed.
 
GBP LIBOR
 
– The court dismissed the GBP LIBOR action
 
in 2019. Plaintiffs have appealed.
 
Government bonds:
 
Putative class actions
 
have been filed
 
since 2015 in
 
US federal courts
 
against UBS and
 
other
banks
 
on
 
behalf
 
of
 
persons
 
who
 
participated
 
in
 
markets
 
for
 
US
 
Treasury
 
securities
 
since
 
2007.
 
A
 
consolidated
complaint was filed in 2017 in the US District Court
 
for the Southern District of New York alleging that the banks
colluded with
 
respect to,
 
and manipulated
 
prices of,
 
US Treasury
 
securities sold
 
at auction
 
and in
 
the secondary
market and
 
asserting claims under
 
the antitrust
 
laws and
 
for unjust
 
enrichment. Defendants’ motions
 
to dismiss
the consolidated complaint
 
were granted in 2021.
 
Plaintiffs filed an amended
 
complaint, which defendants
 
moved
to dismiss later in 2021. In March 2022, the court granted
 
defendants’ motion to dismiss that complaint.
 
Plaintiffs
have
 
appealed the
 
dismissal. Similar
 
class
 
actions have
 
been
 
filed concerning
 
European government
 
bonds and
other government bonds.
In
 
2021,
 
the
 
European Commission
 
issued
 
a
 
decision finding
 
that
 
UBS
 
and
 
six
 
other
 
banks
 
breached European
Union antitrust rules in 2007–2011
 
relating to European government
 
bonds. The European Commission
 
fined UBS
EUR
172
m. UBS is appealing the amount of the fine.
With respect
 
to additional
 
matters and
 
jurisdictions not
 
encompassed by
 
the settlements
 
and orders
 
referred to
above, our balance sheet at 30 June 2023
 
reflected a provision in an amount that UBS
 
believes to be appropriate
under the
 
applicable accounting
 
standard. As
 
in the case
 
of other
 
matters for
 
which we
 
have established
 
provisions,
the future outflow of resources in respect of such matters
 
cannot be determined with certainty based on currently
available information
 
and accordingly
 
may ultimately
 
prove to
 
be substantially
 
greater (or
 
may be
 
less) than
 
the
provision that we have recognized.
5. Swiss retrocessions
The Federal Supreme Court of Switzerland ruled in 2012, in
 
a test case against UBS, that distribution fees paid
 
to
a firm for distributing third-party
 
and intra-group investment funds
 
and structured products must be disclosed
 
and
surrendered
 
to
 
clients
 
who have
 
entered
 
into
 
a
 
discretionary
 
mandate agreement
 
with
 
the
 
firm,
 
absent a
 
valid
waiver. FINMA issued a
 
supervisory note
 
to all Swiss
 
banks in response
 
to the Supreme
 
Court decision.
 
UBS has
 
met
the FINMA requirements and has notified all potentially
 
affected clients.
The Supreme
 
Court decision
 
has resulted, and
 
continues to
 
result, in a
 
number of
 
client requests
 
for UBS to
 
disclose
and potentially surrender retrocessions. Client requests are assessed on a case-by-case basis. Considerations taken
into account
 
when assessing
 
these cases
 
include, among
 
other things,
 
the existence
 
of a discretionary
 
mandate and
whether or not the client documentation contained
 
a valid waiver with respect to distribution
 
fees.
Our
 
balance sheet
 
at 30
 
June
 
2023 reflected
 
a
 
provision with
 
respect to
 
matters described
 
in
 
this
 
item 5
 
in
 
an
amount that UBS believes to be appropriate under the applicable accounting standard. The ultimate exposure will
depend on client
 
requests and the resolution
 
thereof, factors that are
 
difficult to predict
 
and assess. Hence, as
 
in
the case of
 
other matters for which
 
we have established provisions,
 
the future outflow
 
of resources in
 
respect of
such matters
 
cannot be
 
determined with certainty
 
based on
 
currently available information
 
and accordingly may
ultimately prove to be substantially greater (or
 
may be less) than the provision that we
 
have recognized.
Litigation regulatory and similar matters
 
involving Credit Suisse entities
1. Mortgage-related matters
Government and regulatory related matters
DOJ RMBS
 
settlement
: On
 
January 18,
 
2017, Credit
 
Suisse Securities
 
(USA) LLC
 
(CSS LLC)
 
and its
 
current and
 
former
US subsidiaries and US affiliates reached a settlement
 
with the US Department of Justice (DOJ)
 
related to its legacy
Residential
 
Mortgage-Backed
 
Securities
 
(RMBS)
 
business,
 
a
 
business
 
conducted
 
through
 
2007.
 
The
 
settlement
resolved potential civil
 
claims by the
 
DOJ related
 
to certain of
 
those Credit Suisse
 
entities’ packaging, marketing,
structuring, arrangement, underwriting, issuance
 
and sale of RMBS. Pursuant to the terms
 
of the settlement a civil
monetary penalty was paid to
 
the DOJ in
 
January 2017. The settlement also
 
required the Credit
 
Suisse entities to
provide certain
 
levels of
 
consumer relief
 
measures, including
 
affordable housing
 
payments and
 
loan forgiveness,
and the DOJ and
 
Credit Suisse agreed
 
to the appointment of an
 
independent monitor to oversee the
 
completion
of the
 
consumer relief
 
requirements
 
of the
 
settlement. Credit
 
Suisse continues
 
to evaluate
 
its
 
approach toward
satisfying its
 
remaining consumer
 
relief obligations,
 
and Credit
 
Suisse currently
 
anticipates that
 
it will
 
take much
longer
 
than
 
the
 
five-year
 
period
 
provided
 
in
 
the
 
settlement
 
to
 
satisfy
 
in
 
full
 
its
 
obligations
 
in
 
respect
 
of
 
these
consumer relief
 
measures, subject
 
to risk
 
appetite and
 
market conditions.
 
Credit Suisse
 
expects to
 
incur costs
 
in
relation to
 
satisfying those
 
obligations. The
 
amount of
 
consumer relief
 
Credit Suisse
 
must provide
 
also increases
after
 
2021
 
pursuant
 
to
 
the
 
original
 
settlement
 
by
5
%
 
per
 
annum
 
of
 
the
 
outstanding
 
amount
 
due
 
until
 
these
obligations are settled. The monitor publishes reports periodically
 
on these consumer relief matters.
Civil litigation
: CSS LLC and/or certain of its affiliates have also been named as defendants in various civil litigation
matters related to their roles as issuer, sponsor, depositor, underwriter and/or servicer
 
of RMBS transactions. These
cases
 
currently
 
include
 
repurchase
 
actions
 
by
 
RMBS
 
trusts
 
and/or
 
trustees,
 
in
 
which
 
plaintiffs
 
generally
 
allege
breached representations
 
and warranties
 
in respect
 
of mortgage
 
loans and
 
failure to
 
repurchase such
 
mortgage
loans
 
as required
 
under the
 
applicable agreements.
 
The
 
amounts disclosed
 
below do
 
not
 
reflect
 
actual
 
realized
plaintiff losses to date or anticipated future litigation exposure. Unless
 
otherwise stated, these amounts reflect the
original unpaid principal balance amounts
 
as alleged in these actions and do not
 
include any reduction in principal
amounts since issuance.
DLJ Mortgage Capital, Inc. (DLJ) is a defendant in New York state court in: (i)
 
one action brought by Asset Backed
Securities Corporation
 
Home Equity
 
Loan Trust,
 
Series 2006-HE7,
 
in which plaintiff
 
alleges damages
 
of not
 
less than
USD
374
m in an
 
amended complaint
 
filed on August
 
19, 2019; on
 
January 13, 2020,
 
DLJ filed a
 
motion to dismiss;
(ii) one
 
action brought by
 
Home Equity
 
Asset Trust,
 
Series 2006-8,
 
in which
 
plaintiff alleges
 
damages of
 
not less
than USD
436
m; (iii) one action brought by Home Equity Asset Trust 2007-1,
 
in which plaintiff alleges damages of
not less than USD
420
m; on December 27, 2018, the court denied DLJ’s motion for
 
partial summary judgment in
this action, which was affirmed on appeal; on March 17, 2022, the New
 
York State Court of Appeals reversed the
decision and ordered
 
that DLJ’s motion
 
for partial summary
 
judgment be granted;
 
a non-jury trial in the
 
action was
held between January 23 and
 
February 3, 2023, and a
 
decision is pending; (iv) one
 
action brought by Home Equity
Asset Trust 2007-2, in which
 
plaintiff alleges damages of not less
 
than USD
495
m; and (v) one
 
action brought by
CSMC
 
Asset-Backed
 
Trust
 
2007-NC1,
 
in
 
which
 
no
 
damages
 
amount
 
is
 
alleged.
 
These
 
actions
 
are
 
at
 
various
procedural stages.
 
DLJ is also a defendant in one
 
action brought by Home Equity Asset Trust Series 2007-3, in
 
which plaintiff alleges
damages of not
 
less than USD
206
m. On March
 
5, 2022, DLJ
 
and the plaintiffs
 
executed an agreement
 
to settle
this action.
 
The settlement
 
remains subject
 
to approval
 
through a
 
trust instruction
 
proceeding brought
 
in Minnesota
state court by the trustee of the plaintiff
 
trust.
 
DLJ and its affiliate, Select Portfolio Servicing, Inc. (SPS), were defendants
 
in two consolidated actions in New York
state court: one action brought
 
by Home Equity Mortgage
 
Trust Series 2006-1, Home
 
Equity Mortgage Trust
 
Series
2006-3 and Home
 
Equity Mortgage Trust
 
Series 2006-4, in
 
which plaintiffs allege
 
damages of not
 
less than USD
730
m; and one action brought
 
by Home Equity Mortgage Trust
 
Series 2006-5, in which plaintiff alleges
 
damages
of not less
 
than USD
500
m. On April
 
19, 2021, DLJ,
 
SPS and the
 
plaintiffs executed an
 
agreement to settle both
actions for the aggregate amount of USD
500
m, for which Credit Suisse was fully
 
reserved. On May 2, 2023, the
Minnesota state
 
court approved the
 
settlement through a
 
trust instruction proceeding
 
brought by
 
the trustee
 
of
the plaintiff trusts. The New York state court
 
dismissed the underlying actions with
 
prejudice on July 10, 2023.
2. Tax and securities law matters
On May 19,
 
2014, Credit Suisse
 
AG entered
 
into settlement agreements
 
with several US
 
regulators regarding
 
its
US
 
cross-border
 
matters.
 
As
 
part
 
of
 
the
 
agreements,
 
Credit
 
Suisse
 
AG,
 
among
 
other
 
things,
 
engaged
 
an
independent corporate monitor
 
that reports to the
 
New York State Department of Financial Services.
 
As of July 31,
2018,
 
the monitor
 
concluded both
 
his review
 
and his
 
assignment. Credit
 
Suisse AG
 
continues to
 
report to
 
and
cooperate with US authorities in accordance
 
with Credit Suisse AG’s obligations under
 
the agreements, including
by conducting
 
a review
 
of cross-border
 
services provided
 
by Credit
 
Suisse’s Switzerland-based
 
Israel Desk.
 
Most
recently,
 
Credit Suisse
 
AG has
 
provided information to
 
US authorities regarding
 
potentially undeclared US
 
assets
held by
 
clients at
 
Credit
 
Suisse AG
 
since the
 
May 2014
 
plea. Credit
 
Suisse AG
 
continues to
 
cooperate with
 
the
authorities. In March 2023, the US Senate Finance Committee issued a report criticizing Credit Suisse AG’s history
regarding US tax
 
compliance. The report called on
 
the DOJ to investigate Credit
 
Suisse AG’s compliance with the
2014 plea.
In February 2021,
 
a qui tam
 
complaint was filed
 
in the Eastern
 
District of Virginia, alleging
 
that Credit Suisse AG
had violated the
 
False Claims Act
 
by failing to
 
disclose all US
 
accounts at the
 
time of the
 
2014 plea, which
 
allegedly
allowed Credit Suisse AG to pay a criminal fine in 2014 that was purportedly lower than it should have been. The
DOJ moved to
 
dismiss the case, and
 
the Court summarily dismissed
 
the suit. The
 
case is now
 
on appeal with the
US Federal Court of Appeals for the Fourth
 
Circuit.
3. Rates-related matters
Regulatory matters
: Regulatory authorities in a number of jurisdictions, including the US, UK, EU and Switzerland,
have for an extended period of time been conducting investigations into the setting of LIBOR and other reference
rates with
 
respect to
 
a number
 
of currencies,
 
as well
 
as the
 
pricing of
 
certain related
 
derivatives. These
 
ongoing
investigations have included
 
information requests from regulators
 
regarding LIBOR-setting practices
 
and reviews of
the activities
 
of various
 
financial institutions,
 
including Credit
 
Suisse Group
 
AG, which
 
was a
 
member of
 
three LIBOR
rate-setting panels
 
(US Dollar
 
LIBOR, Swiss
 
Franc LIBOR
 
and Euro
 
LIBOR). Credit
 
Suisse is
 
cooperating fully
 
with
these investigations.
Regulatory authorities in a number of jurisdictions, including WEKO,
 
the European Commission (Commission), the
South
 
African
 
Competition
 
Commission
 
and
 
the
 
Brazilian
 
Competition
 
Authority
 
have
 
been
 
conducting
investigations into
 
the
 
trading activities,
 
information sharing
 
and
 
the
 
setting of
 
benchmark
 
rates in
 
the
 
foreign
exchange (including electronic trading) markets.
On
 
March
 
31,
 
2014,
 
WEKO
 
announced
 
its
 
formal
 
investigation
 
of
 
numerous
 
Swiss
 
and
 
international
 
financial
institutions, including
 
Credit
 
Suisse Group
 
AG,
 
in
 
relation
 
to the
 
setting of
 
exchange rates
 
in
 
foreign exchange
trading. Credit Suisse continues to cooperate
 
with this ongoing investigation.
Credit Suisse
 
Group AG,
 
Credit Suisse
 
AG and
 
Credit Suisse
 
Securities (Europe)
 
Limited (CSSEL)
 
received a
 
Statement
of Objections and a Supplemental Statement of Objections from the Commission
 
on July 26, 2018 and March 19,
2021, respectively, alleging
 
that Credit Suisse entities
 
engaged in anticompetitive
 
practices in connection with
 
their
foreign exchange
 
trading business.
 
On December
 
6, 2021,
 
the Commission
 
issued a
 
formal decision
 
imposing a
fine of EUR
83.3
m. On February 15, 2022, Credit Suisse
 
appealed this decision to the EU General Court.
The
 
reference
 
rates
 
investigations
 
have
 
also
 
included
 
information
 
requests
 
from
 
regulators
 
concerning
supranational, sub-sovereign
 
and agency
 
(SSA) bonds
 
and commodities
 
markets. Credit
 
Suisse Group
 
AG and
 
CSSEL
received a
 
Statement of
 
Objections from
 
the Commission
 
on December
 
20, 2018,
 
alleging that
 
Credit Suisse
 
entities
engaged in anticompetitive practices in connection with their SSA bonds trading business. On April 28, 2021, the
Commission issued a formal decision
 
imposing a fine of EUR
11.9
m. On July 8,
 
2021, Credit Suisse appealed this
decision to the EU General Court.
Civil litigation:
USD LIBOR litigation
 
–
Beginning in 2011, certain
 
Credit Suisse entities
 
were named in
 
various putative class and
individual lawsuits
 
filed in
 
the US,
 
alleging banks
 
on the
 
US dollar
 
LIBOR panel
 
manipulated US
 
dollar LIBOR
 
to
benefit their reputation
 
and increase
 
profits. All
 
remaining matters have
 
been consolidated for
 
pre-trial purposes
into a multi-district litigation in the US District
 
Court for the Southern District of
 
New York (SDNY).
In a series of rulings between 2013 and 2019 on motions
 
to dismiss, the SDNY (i) narrowed the claims against
 
the
Credit
 
Suisse
 
entities
 
and
 
the
 
other
 
defendants
 
(dismissing
 
antitrust,
 
Racketeer
 
Influenced
 
and
 
Corrupt
Organizations Act (RICO), Commodity Exchange Act, and
 
state law claims), (ii) narrowed
 
the set of plaintiffs who
may bring claims, and
 
(iii) narrowed the set
 
of defendants in the
 
LIBOR actions (including the
 
dismissal of several
Credit Suisse entities from
 
various cases on personal jurisdiction
 
and statute of limitation grounds).
 
After a number
of putative class and individual plaintiffs appealed the dismissal of their antitrust
 
claims to the United States Court
of Appeals for the Second
 
Circuit (Second Circuit), on
 
December 30, 2021, the
 
Second Circuit affirmed in part
 
and
reversed in part the district court’s decision
 
and remanded the case to the SDNY.
On September 21, 2021, in the putative class action brought in the multi-district litigation in the SDNY by holders
of bonds
 
tied to
 
LIBOR, Credit
 
Suisse entered
 
into an
 
agreement to
 
settle all
 
claims. On
 
November 7,
 
2022 and
March 28, 2023, respectively,
 
the court entered orders
 
granting preliminary and final
 
approval to the agreement
 
to
settle all claims.
Separately, on May 4, 2017, the plaintiffs in three putative class actions moved for class certification. On February
28, 2018, the SDNY
 
denied certification in two
 
of the actions and
 
granted certification over
 
a single antitrust
 
claim
in an action brought by over-the-counter purchasers
 
of LIBOR-linked derivatives.
USD ICE
 
LIBOR litigation
 
– On August
 
18, 2020, members
 
of the
 
ICE LIBOR panel,
 
including Credit Suisse
 
Group
AG and
 
certain of
 
its affiliates,
 
were named
 
in a
 
civil action
 
in the
 
US District
 
Court for
 
the Northern
 
District of
California, alleging that panel banks manipulated ICE LIBOR to profit from variable interest loans and credit cards.
On December
 
23, 2021,
 
the court
 
denied plaintiffs’
 
motion for
 
preliminary and
 
permanent injunctions
 
to enjoin
panel
 
banks
 
from
 
continuing
 
to
 
set
 
LIBOR
 
or
 
automatically
 
setting
 
the
 
benchmark
 
to
 
zero
 
each
 
day,
 
and
 
on
September 13,
 
2022, the
 
court granted
 
defendants’ motions
 
to dismiss.
 
On October
 
4, 2022,
 
plaintiffs filed
 
an
amended complaint. On November 4, 2022,
 
defendants filed a motion to dismiss
 
the amended complaint.
CHF LIBOR litigation
 
– In February 2015,
 
various banks that
 
served on the Swiss
 
franc LIBOR panel,
 
including Credit
Suisse Group
 
AG, were
 
named in
 
a civil
 
putative class
 
action lawsuit
 
filed in
 
the SDNY,
 
alleging manipulation of
Swiss franc LIBOR to benefit defendants’ trading positions. After defendants’ motion to dismiss for lack of subject
matter jurisdiction was
 
granted and plaintiffs
 
successfully appealed,
 
on July 13, 2022,
 
Credit Suisse entered
 
into an
agreement to settle all claims. On February 15, 2023, the
 
court entered an order granting preliminary approval to
the agreement to settle all claims. The settlement
 
remains subject to final court approval.
Foreign exchange litigation –
 
Credit Suisse Group AG and affiliates
 
as well as other financial institutions
 
have been
named in civil lawsuits relating to the alleged
 
manipulation of foreign exchange
 
rates.
The first
 
matter is
 
a consolidated
 
class action,
 
in which
 
a jury
 
trial was
 
held in
 
October 2022
 
on the
 
issues of
 
whether
a
 
conspiracy
 
existed
 
to
 
manipulate
 
bid-ask
 
spreads
 
in
 
the
 
FX
 
market
 
and
 
whether
 
Credit
 
Suisse
 
knowingly
participated in
 
any such
 
conspiracy. On October
 
20, 2022,
 
a verdict
 
was issued
 
in favor
 
of Credit
 
Suisse, finding
that Credit Suisse did not knowingly participate
 
in any such conspiracy, and on March 28,
 
2023, the court entered
final judgment
 
against plaintiffs
 
and in favor
 
of Credit
 
Suisse on all
 
remaining claims.
 
Plaintiffs did not
 
file an appeal
by the April 27, 2023 deadline.
Credit Suisse AG, together with other financial institutions,
 
was also named in a consolidated putative class action
in Israel,
 
which made allegations
 
similar to the
 
consolidated class action. On
 
April 4, 2022,
 
Credit Suisse entered
into an agreement to settle all claims. The
 
settlement remains subject to court approval.
Treasury markets
 
litigation
 
– CSS
 
LLC, along
 
with over
 
20 other
 
primary dealers
 
of US
 
treasury securities,
 
was named
in a number of
 
putative civil class
 
action complaints
 
in the US relating
 
to the US
 
treasury markets. These
 
complaints
generally alleged
 
that the
 
defendants colluded
 
to manipulate
 
US treasury
 
auctions, as
 
well as
 
the pricing
 
of US
treasury securities in the
 
when-issued market, with impacts upon
 
related futures and options, and
 
that certain of
the defendants
 
participated in
 
a group
 
boycott to
 
prevent the
 
emergence of
 
anonymous all-to-all
 
trading in
 
the
secondary market
 
for treasury
 
securities. On March
 
31, 2022,
 
the SDNY granted
 
defendants’ motion
 
to dismiss and
dismissed with prejudice all claims against
 
the defendants. On April 28, 2022, plaintiffs
 
filed a notice of appeal.
SSA bonds litigation
 
– Credit Suisse
 
Group AG and
 
certain of its affiliates,
 
together with other
 
financial institutions,
were named in
 
two Canadian
 
putative class actions,
 
which allege that
 
defendants conspired
 
to fix the
 
prices of SSA
bonds
 
sold
 
to
 
and
 
purchased from
 
investors
 
in
 
the
 
secondary
 
market. One
 
putative
 
class
 
action
 
was
 
dismissed
against Credit Suisse on February 19, 2020.
 
On October 18, 2022, in the second action,
 
Credit Suisse entered into
an agreement to settle all claims. The settlement
 
remains subject to court approval.
Credit default swap auction litigation –
On June 30, 2021, Credit Suisse Group AG and affiliates, along
 
with other
banks and entities, were named in a putative class action
 
complaint filed in the US District Court for
 
the District of
New Mexico alleging manipulation of credit default swap (CDS) final auction prices. On April 5, 2022, defendants
filed a
 
motion to
 
dismiss. On
 
June 5,
 
2023, the
 
court granted
 
in part
 
and denied
 
in part
 
defendants’ motion
 
to
dismiss.
4. OTC trading cases
Interest rate
 
swaps litigation:
 
Credit
 
Suisse Group
 
AG and
 
affiliates, along
 
with other
 
financial institutions,
 
have
been
 
named
 
in
 
a
 
consolidated
 
putative
 
civil
 
class
 
action
 
complaint
 
and
 
complaints
 
filed
 
by
 
individual
 
plaintiffs
relating
 
to interest
 
rate swaps,
 
alleging that
 
dealer defendants
 
conspired
 
with trading
 
platforms to
 
prevent
 
the
development of interest rate swap exchanges. The individual lawsuits were brought by TeraExchange
 
LLC, a swap
execution facility, and affiliates; Javelin Capital Markets LLC, a swap execution facility,
 
and an affiliate; and trueEX
LLC, a
 
swap execution
 
facility, which claim
 
to have
 
suffered lost
 
profits as
 
a result
 
of defendants’
 
alleged conspiracy.
All interest rate swap actions have been consolidated
 
in a multi-district litigation in the SDNY.
Defendants moved to dismiss the
 
putative class and individual actions,
 
and the SDNY granted
 
in part and denied
in part these motions.
On February
 
20, 2019,
 
class plaintiffs
 
in the
 
consolidated multi-district
 
litigation filed
 
a motion
 
for class
 
certification.
On March
 
20, 2019,
 
class plaintiffs
 
filed a
 
fourth amended
 
consolidated class
 
action complaint.
 
On January
 
21,
2022, Credit Suisse
 
entered into an
 
agreement to settle all
 
class action claims. The
 
settlement remains subject to
court approval. The individual lawsuits are
 
stayed pending a decision on plaintiffs’
 
motion for class certification.
Credit default swaps litigation
: On June 8, 2017, Credit Suisse Group AG and
 
affiliates, along with other financial
institutions, were named in a
 
civil action filed in
 
the SDNY by Tera
 
Group, Inc. and related
 
entities (Tera), alleging
violations of antitrust
 
law in
 
connection with the
 
allegation that CDS
 
dealers conspired to
 
block Tera’s electronic
CDS trading
 
platform from
 
successfully entering
 
the market.
 
On July
 
30, 2019,
 
the SDNY
 
granted in
 
part and
 
denied
in part
 
defendants’ motion
 
to dismiss.
 
On January
 
30, 2020,
 
plaintiffs filed
 
an amended
 
complaint. On
 
April 3,
2020, defendants filed a motion to dismiss.
Stock loan litigation
: Credit Suisse
 
Group AG and certain
 
of its affiliates,
 
as well as
 
other financial institutions,
 
were
originally named in
 
a number of
 
civil lawsuits in
 
the SDNY, certain
 
of which
 
are brought by
 
class action plaintiffs
alleging that the
 
defendants conspired to
 
keep stock-loan
 
trading in
 
an over-the-counter market
 
and collectively
boycotted certain trading platforms that sought to enter the market, and certain of
 
which are brought by trading
platforms that
 
sought to
 
enter the
 
market alleging
 
that the
 
defendants collectively
 
boycotted the
 
platforms. On
January 20, 2022, Credit Suisse entered into an agreement to settle all class action claims. On
 
February 25, 2022,
the court
 
entered an
 
order granting
 
preliminary approval
 
to the
 
agreement to
 
settle all
 
class action
 
claims. The
settlement remains subject to final court
 
approval.
 
On October
 
1, 2021,
 
in
 
a consolidated
 
civil litigation
 
brought in
 
the SDNY
 
by entities
 
that developed
 
a
 
trading
platform for stock
 
loans that sought
 
to enter the
 
market, alleging that
 
the defendants collectively
 
boycotted the
platform, the court
 
granted defendants’
 
motion to dismiss.
 
On October 25,
 
2021, plaintiffs filed
 
a notice of
 
appeal.
On March 24, 2023, the Second Circuit affirmed
 
the decision granting defendants’ motion
 
to dismiss.
Odd-lot corporate
 
bond litigation:
On April
 
21, 2020,
 
CSS LLC
 
and other
 
financial institutions
 
were named
 
in a
putative class action complaint filed in the SDNY, alleging a conspiracy among the financial institutions to boycott
electronic trading platforms
 
and fix
 
prices in
 
the secondary
 
market for odd-lot
 
corporate bonds. On
 
October 25,
2021, the SDNY granted defendants’ motion to
 
dismiss. On November 23, 2021, plaintiffs filed a notice
 
of appeal
to the Second Circuit.
5. ATA litigation
Since November 2014, a series of lawsuits have been filed
 
against a number of banks, including Credit Suisse AG
and, in two instances, Credit Suisse AG, New York
 
Branch, in the US District Court for the Eastern District of New
York (EDNY) and the
 
SDNY alleging
 
claims under
 
the United
 
States Anti-Terrorism Act (ATA) and the
 
Justice Against
Sponsors of Terrorism Act. The plaintiffs in each of these
 
lawsuits are, or are relatives of, victims
 
of various terrorist
attacks in Iraq
 
and allege a
 
conspiracy and/or aiding
 
and abetting based
 
on allegations that
 
various international
financial institutions, including
 
the defendants, agreed
 
to alter, falsify or omit information from
 
payment messages
that
 
involved
 
Iranian
 
parties
 
for
 
the
 
express
 
purpose
 
of
 
concealing
 
the
 
Iranian
 
parties’
 
financial
 
activities
 
and
transactions from detection by US
 
authorities. The lawsuits allege
 
that this conduct has made
 
it possible for Iran to
transfer funds
 
to Hezbollah
 
and other terrorist
 
organizations actively
 
engaged in
 
harming US
 
military personnel
 
and
civilians. On January 5, 2023, the United States Court of Appeals for the Second Circuit affirmed a September
 
16,
2019 ruling by the EDNY granting defendants’ motion to dismiss the first filed lawsuit. On May 8, 2023, plaintiffs
filed a petition for
 
a writ of certiorari
 
in the United States
 
Supreme Court. Of the
 
other seven cases,
 
four are stayed
pending the outcome of
 
the petition for
 
a writ of
 
certiorari, including one that
 
was dismissed as
 
to Credit Suisse
and most of the bank defendants prior to entry of the stay,
 
and in three the court has set a schedule for plaintiffs
to file amended complaints,
 
including two that
 
were dismissed prior to
 
the court setting a
 
schedule for plaintiffs
 
to
replead.
6. Customer account matters
Several
 
clients
 
have
 
claimed
 
that
 
a
 
former
 
relationship
 
manager
 
in
 
Switzerland
 
had
 
exceeded
 
his
 
investment
authority
 
in
 
the
 
management of
 
their
 
portfolios, resulting
 
in
 
excessive concentrations
 
of
 
certain
 
exposures
 
and
investment losses.
 
Credit
 
Suisse AG
 
is investigating
 
the claims,
 
as well
 
as transactions
 
among the
 
clients. Credit
Suisse AG filed a criminal complaint against the former relationship manager with the Geneva Prosecutor’s Office
upon which the
 
prosecutor initiated
 
a criminal investigation.
 
Several clients of
 
the former relationship
 
manager also
filed
 
criminal
 
complaints
 
with
 
the
 
Geneva
 
Prosecutor’s
 
Office.
 
On
 
February
 
9,
 
2018,
 
the
 
former
 
relationship
manager
 
was
 
sentenced
 
to
 
five
 
years
 
in
 
prison
 
by
 
the
 
Geneva
 
criminal
 
court
 
for
 
fraud,
 
forgery
 
and
 
criminal
mismanagement and
 
ordered to pay
 
damages of
 
approximately USD
130
m. Several
 
parties appealed
 
the judgment.
On June 26,
 
2019, the
 
Criminal Court
 
of Appeals
 
of Geneva
 
ruled in the
 
appeal of
 
the judgment
 
against the
 
former
relationship
 
manager,
 
upholding
 
the
 
main
 
findings
 
of
 
the
 
Geneva
 
criminal
 
court.
 
Several
 
parties
 
appealed
 
the
decision to the Swiss
 
Federal Supreme Court.
 
On February 19, 2020,
 
the Swiss Federal Supreme
 
Court rendered its
judgment on the appeals, substantially confirming
 
the findings of the Criminal Court of Appeals
 
of Geneva.
Civil lawsuits have been initiated against
 
Credit Suisse AG and/or certain
 
affiliates in various jurisdictions, based
 
on
the findings established in the criminal proceedings
 
against the former relationship manager.
In Singapore, in
 
the civil lawsuit
 
brought against
 
Credit Suisse Trust
 
Limited, a Credit
 
Suisse AG affiliate,
 
on May 26,
2023, the Singapore International Commercial Court issued a first instance judgment
 
finding for the plaintiffs and
directing the parties’ experts to agree on the
 
amount of the damages award according to the calculation method
and
 
parameters
 
adopted
 
by
 
the
 
court.
 
Further,
 
the
 
court
 
determined
 
that
 
(i)
 
damages
 
shall
 
be
 
reduced
 
by
compensation already paid to the plaintiffs
 
and (ii) there shall be
 
no double recovery between this award and
 
the
award in
 
the Bermuda
 
proceedings against
 
Credit Suisse
 
Life (Bermuda)
 
Ltd. Based
 
on the
 
calculations by
 
the parties’
experts,
 
Credit
 
Suisse
 
expects
 
the
 
damages
 
amount
 
to
 
be
 
no
 
more
 
than
 
USD
750
m,
 
excluding
 
post-judgment
interest. This figure
 
does not exclude
 
potential overlap with
 
the Bermuda proceedings, which
 
are currently being
appealed.
 
As
 
the
 
parties’
 
experts
 
have
 
been
 
unable
 
to
 
agree
 
on
 
the
 
amount
 
of
 
the
 
damages,
 
following
 
court
directions, the parties have filed their proposed draft orders with supporting documents on August 25, 2023. It is
expected that the court will issue
 
a final order determining all
 
matters of the suit in September
 
2023. Credit Suisse
Trust Limited intends to appeal the judgment
 
and has applied for a stay of execution
 
pending that appeal.
In Bermuda, in the civil lawsuit brought against
 
Credit Suisse Life (Bermuda) Ltd., a Credit Suisse
 
AG affiliate, trial
took place in the Supreme Court
 
of Bermuda in November and December 2021. The
 
Supreme Court of Bermuda
issued a first instance judgment on March 29, 2022, finding
 
for the plaintiff. On May 6, 2022, the Supreme Court
of Bermuda
 
issued an order
 
awarding damages of
 
USD
607.35
m to
 
the plaintiff. On
 
May 9,
 
2022, Credit
 
Suisse
Life (Bermuda) Ltd. appealed the decision to the Bermuda Court of Appeal. On July 25, 2022, the Supreme Court
of Bermuda granted a stay
 
of execution of its
 
judgment pending appeal on the condition
 
that damages awarded
were paid into an escrow account within
42
 
days, which condition was satisfied. On June 23, 2023, the Bermuda
Court of Appeal
 
issued its
 
judgment confirming
 
the award
 
issued by the
 
Supreme Court
 
of Bermuda
 
and upholding
the Supreme Court
 
of Bermuda’s finding
 
that Credit Suisse
 
Life (Bermuda) Ltd.
 
had breached its
 
contractual and
fiduciary duties,
 
but overturning
 
the Supreme
 
Court of
 
Bermuda’s finding
 
that Credit
 
Suisse Life
 
(Bermuda) Ltd.
had made
 
fraudulent misrepresentations.
 
On July
 
7, 2023,
 
Credit Suisse
 
Life (Bermuda)
 
Ltd. filed
 
its notice
 
of motion
for leave to
 
appeal to the
 
Judicial Committee of the
 
Privy Council. On July
 
14, 2023 Credit
 
Suisse Life (Bermuda)
Ltd. applied
 
for a
 
stay of
 
execution of
 
the Bermuda
 
Court of
 
Appeal’s judgment
 
pending the
 
outcome of
 
the appeal
to the
 
Judicial Committee
 
of the
 
Privy Council
 
on the
 
condition that
 
the damages
 
awarded remain
 
within the
 
escrow
account and that interest be added to the escrow
 
account calculated at the Bermuda statutory
 
rate of
3.5
%.
In Switzerland, civil
 
lawsuits have commenced
 
against Credit Suisse
 
AG in
 
the Court of
 
First Instance
 
of Geneva,
with statements of claim served on March 6
 
and 31, 2023.
7. FIFA-related matters
In connection with investigations
 
by US government authorities
 
into the involvement of financial
 
institutions in the
alleged
 
bribery
 
and
 
corruption
 
surrounding
 
the
 
Fédération
 
Internationale
 
de
 
Football
 
Association
 
(FIFA),
 
Credit
Suisse
 
received inquiries
 
regarding
 
its
 
banking relationships
 
with certain
 
individuals and
 
entities associated
 
with
FIFA,
 
including
 
but
 
not
 
limited
 
to
 
certain
 
persons
 
and
 
entities
 
named
 
and/or
 
described
 
in
 
the
 
May
 
20,
 
2015
indictment
 
and
 
the
 
November
 
25,
 
2015
 
superseding
 
indictment
 
filed
 
by
 
the
 
EDNY
 
US
 
Attorney’s
 
Office.
 
The
investigations
 
encompassed
 
whether
 
multiple
 
financial
 
institutions,
 
including
 
Credit
 
Suisse,
 
permitted
 
the
processing of suspicious or otherwise improper
 
transactions, or failed to observe anti-money laundering laws and
regulations,
 
with
 
respect
 
to
 
the
 
accounts
 
of
 
certain
 
persons
 
and
 
entities
 
associated
 
with
 
FIFA.
 
Credit
 
Suisse
continues to cooperate
 
with US authorities
 
on this matter. The Swiss
 
Financial Market
 
Supervisory Authority
 
FINMA
(FINMA) announced the conclusion of its related investigation
 
in 2018.
8. Mozambique matter
Credit Suisse has
 
been subject
 
to investigations by
 
regulatory and enforcement
 
authorities, as
 
well as civil
 
litigation,
regarding certain Credit
 
Suisse entities’
 
arrangement of
 
loan financing
 
to Mozambique
 
state enterprises,
 
Proindicus
S.A. and Empresa Mocambiacana de Atum S.A. (EMATUM), a distribution to
 
private investors of loan participation
notes (LPN) related
 
to the EMATUM
 
financing in September
 
2013, and certain
 
Credit Suisse
 
entities’ subsequent
role in arranging the exchange
 
of those LPNs for
 
Eurobonds issued by the
 
Republic of Mozambique.
 
In 2019, three
former Credit Suisse employees pleaded guilty in the EDNY to accepting improper personal benefits in connection
with financing transactions carried out with
 
two Mozambique state enterprises.
On October
 
19, 2021,
 
Credit Suisse
 
reached settlements
 
with the
 
DOJ, the
 
US Securities
 
Exchange Commission
(SEC), the
 
UK Financial
 
Conduct Authority (FCA)
 
and FINMA
 
to resolve
 
inquiries by these
 
agencies. Credit Suisse
Group AG entered
 
into a three-year
 
Deferred Prosecution Agreement (DPA)
 
with the DOJ
 
in connection with
 
the
criminal information charging Credit Suisse Group
 
AG with conspiracy to commit wire fraud and consented
 
to the
entry of a Cease
 
and Desist Order by the SEC.
 
Under the terms of the
 
DPA, Credit Suisse Group AG
 
will continue
its
 
compliance
 
enhancement
 
and
 
remediation
 
efforts,
 
report
 
to
 
the
 
DOJ
 
on
 
those
 
efforts
 
for
 
three
 
years
 
and
undertake additional measures as
 
outlined in the DPA. Credit Suisse
 
also agreed to pay a net
 
penalty to the DOJ of
approximately
 
USD
175.5
m.
 
If
 
Credit
 
Suisse
 
Group
 
AG
 
adheres
 
to
 
the
 
DPA’s
 
conditions,
 
the
 
charges
 
will
 
be
dismissed at the end of the DPA’s three-year term. In addition, CSSEL entered into a Plea Agreement and pleaded
guilty to
 
one count
 
of conspiracy
 
to violate
 
the US
 
federal wire
 
fraud statute.
 
CSSEL will
 
be bound
 
by the
 
same
compliance, remediation and reporting obligations as Credit Suisse Group AG under the DPA.
 
Under the terms of
the SEC
 
Cease and
 
Desist Order,
 
Credit
 
Suisse paid
 
a
 
civil
 
penalty of
 
USD
65
m and
 
approximately USD
34
m in
disgorgement and pre-judgment interest in connection with violations of antifraud
 
provisions of the US Securities
Exchange Act
 
of 1934
 
(Exchange Act)
 
and the
 
US Securities
 
Act of
 
1933 (Securities
 
Act) (Exchange
 
Act Section
10(b) and
 
Rule 10b-5
 
thereunder and
 
Securities Act
 
Sections 17(a)(1), (2)
 
and (3))
 
as well
 
as internal
 
accounting
controls
 
and
 
books
 
and
 
records
 
provisions of
 
the
 
Exchange
 
Act
 
(Sections 13(b)(2)(A)
 
and
 
13(b)(2)(B)). The
 
total
monetary sanctions paid
 
to the
 
DOJ and
 
SEC, taking into
 
account various credits
 
and offsets, was
 
approximately
USD
275
m. Under the
 
terms of the
 
resolution with the
 
DOJ, Credit Suisse
 
was required to
 
pay restitution to
 
any
eligible investors in
 
the 2016 Eurobonds
 
issued by the
 
Republic of Mozambique. At
 
a July
 
22, 2022 hearing,
 
the
EDNY approved
 
the joint
 
restitution proposal
 
of the
 
DOJ and
 
Credit Suisse,
 
under which
 
Credit Suisse
 
paid USD
22.6
m in restitution
 
to eligible investors.
 
At the
 
hearing Credit Suisse
 
was also ordered
 
to pay, and
 
subsequently
paid, the USD
175.6
m net penalty set out in the DPA and
 
Plea Agreement described above.
In the
 
resolution with
 
the FCA,
 
CSSEL, Credit
 
Suisse International
 
(CSI) and
 
Credit Suisse
 
AG, London
 
Branch agreed
that, in respect of these transactions
 
with Mozambique, its UK operations
 
had failed to conduct business with
 
due
skill, care and
 
diligence and to take
 
reasonable care to organize
 
and control its affairs
 
responsibly and effectively,
with adequate
 
risk management systems.
 
Credit Suisse paid
 
a penalty
 
of approximately
 
USD
200
m and
 
has also
agreed with the FCA to forgive USD
200
m of debt owed to Credit Suisse by Mozambique.
FINMA also entered a decree announcing the conclusion of its enforcement proceeding, finding that Credit Suisse
AG and Credit Suisse
 
(Schweiz) AG violated the
 
duty to file a
 
suspicious activity report in
 
Switzerland, and Credit
Suisse
 
Group
 
AG
 
did
 
not
 
adequately manage
 
and
 
address
 
the
 
risks arising
 
from specific
 
sovereign lending
 
and
related securities
 
transactions, and ordering
 
the bank
 
to remediate
 
certain deficiencies. FINMA
 
also arranged
 
for
certain existing
 
transactions to
 
be reviewed
 
by the same
 
independent third
 
party on
 
the basis
 
of specific risk
 
criteria,
and
 
required
 
enhanced
 
disclosure
 
of
 
certain
 
sovereign
 
transactions
 
until
 
all
 
remedial
 
measures
 
have
 
been
satisfactorily implemented.
 
Credit Suisse
 
has completed
 
implementation of
 
the measures
 
required under
 
the FINMA
decree. An
 
independent third
 
party appointed
 
by FINMA
 
is reviewing
 
the implementation
 
and effectiveness
 
of these
measures.
On February 27,
 
2019, certain Credit
 
Suisse entities, the
 
same three former
 
employees, and several
 
other unrelated
entities were
 
sued in
 
the English
 
High Court
 
by the
 
Republic of
 
Mozambique. On
 
January 21,
 
2020, the
 
Credit
Suisse entities filed
 
their defense. On
 
June 26, 2020, the
 
Credit Suisse entities
 
filed third-party claims against
 
the
project contractor and several Mozambique officials. The Republic
 
of Mozambique filed an updated Particulars of
Claim on
 
October 27,
 
2020, and
 
the Credit
 
Suisse entities
 
filed their
 
amended defense
 
and counterclaim
 
on January
15, 2021. Following
 
the announcement
 
of the global
 
regulatory resolution
 
on October 19,
 
2021, Credit Suisse
 
filed
a re-amended defense
 
on December 24,
 
2021. The Republic
 
of Mozambique seeks
 
a declaration that
 
the sovereign
guarantee issued
 
in
 
connection with
 
the
 
ProIndicus loan
 
syndication arranged
 
and
 
funded, in
 
part,
 
by
 
a
 
Credit
Suisse subsidiary
 
is void
 
and also
 
seeks damages
 
alleged to
 
have arisen
 
in connection
 
with the
 
transactions involving
ProIndicus and
 
EMATUM, and
 
a transaction
 
in which
 
Credit Suisse
 
had no
 
involvement with
 
Mozambique Asset
Management S.A.
 
Also on
 
January 15,
 
2021, the
 
project contractor
 
filed a
 
cross claim
 
against the
 
Credit Suisse
entities (as
 
well as
 
the three
 
former Credit
 
Suisse employees
 
and various
 
Mozambican
 
officials) seeking
 
an indemnity
and/or contribution in the event that the contractor is found liable to the Republic of
 
Mozambique. On August 4,
2022, the Republic of Mozambique filed an updated Particulars of Claim addressing Credit Suisse’s October 2021
resolutions with various regulatory and enforcement
 
authorities, and framing its claim for consequential
 
damages.
On
 
September
 
23,
 
2022,
 
Credit
 
Suisse
 
filed
 
its
 
Re-Amended
 
Defense
 
in
 
response.
 
The
 
English
 
High
 
Court
 
has
scheduled trial to begin in October 2023.
On April
 
27, 2020, Banco
 
Internacional de Moçambique
 
(BIM), a member
 
of the ProIndicus
 
syndicate, brought a
claim
 
against
 
certain
 
Credit
 
Suisse
 
entities
 
seeking,
 
contingent
 
on
 
the
 
Republic
 
of
 
Mozambique’s
 
claim,
 
a
declaration that Credit Suisse
 
is liable to compensate
 
it for alleged losses suffered
 
as a result of any
 
invalidity of the
sovereign guarantee. The Credit Suisse entities filed their defense to this claim on August 28, 2020, to which BIM
replied on
 
October 16,
 
2020. Credit
 
Suisse filed
 
an amended
 
defense on
 
December 15,
 
2021, and
 
BIM filed
 
its
amended reply on January 5, 2022.
On December
 
17, 2020,
 
two members
 
of the
 
ProIndicus syndicate,
 
Beauregarde Holdings
 
LLP and
 
Orobica Holdings
LLC
 
(B&O), filed
 
a
 
claim against
 
certain Credit
 
Suisse entities
 
in
 
respect of
 
their interests
 
in
 
the ProIndicus
 
loan,
seeking unspecified
 
damages stemming
 
from the
 
alleged loss
 
suffered due
 
to their
 
reliance on
 
representations
 
made
by Credit Suisse
 
to the syndicate lenders.
 
Credit Suisse filed their
 
defense to this claim
 
on February 24, 2021.
 
On
February 4, 2022,
 
B&O filed an
 
amended claim, and
 
Credit Suisse filed
 
an amended defense
 
on February 18,
 
2022.
On June 3, 2021,
 
United Bank for Africa
 
PLC (UBA), a member
 
of the ProIndicus syndicate,
 
brought a claim against
certain Credit Suisse entities
 
seeking, contingent on the Republic
 
of Mozambique’s claim, a
 
declaration that Credit
Suisse is liable to compensate it for alleged losses suffered as a result of
 
any invalidity of the sovereign guarantee.
The
 
Credit
 
Suisse
 
entities
 
filed
 
their
 
defense
 
to
 
this
 
claim
 
on
 
July
 
1,
 
2021
 
and
 
filed
 
an
 
amended
 
defense
 
on
December 15, 2021, and UBA filed its amended
 
reply on January 5, 2022.
On March 16, 2023, Moza
 
Banco S.A., a syndicate member
 
of the ProIndicus loan, filed
 
a claim against CSI, Credit
Suisse AG
 
and CSSEL
 
in the
 
English High
 
Court, making
 
allegations similar
 
to those
 
in litigations
 
filed by
 
other
ProIndicus syndicate members. This claim has been stayed until the determination of the October 2023 trial in the
English High Court in the litigation brought
 
by the Republic of Mozambique.
 
On February
 
23, 2022,
 
Privinvest Holding
 
SAL (Privinvest), the
 
parent company
 
of certain
 
entities involved in
 
the
Mozambique transactions, and
 
its owner
 
Iskandar Safa
 
brought a
 
defamation claim
 
in a
 
Lebanese court
 
against
CSSEL and
 
Credit Suisse
 
Group AG.
 
The lawsuit
 
alleges
 
damage to
 
the claimants’
 
professional reputation
 
in Lebanon
due to
 
statements that
 
were allegedly
 
made by
 
Credit Suisse
 
in documents
 
relating to
 
the October
 
2021 settlements
with global regulators. On August 18,
 
2022, the parties agreed to
 
a stay of the
 
proceedings until the date of
 
the
final judicial
 
determination of the
 
English High
 
Court litigation,
 
including any
 
appeals, and
 
on August
 
23, 2022,
the parties filed an application for a stay
 
with the Lebanese Court.
On November 2,
 
2022, Jean Boustani,
 
a Privinvest employee
 
who was the
 
lead negotiator on
 
behalf of Privinvest
 
in
relation to
 
the Mozambique
 
transactions, brought
 
a defamation
 
claim in
 
a Lebanese
 
court against
 
Credit Suisse
Group AG
 
and CSSEL.
 
The lawsuit
 
makes substantially
 
the same
 
allegations as
 
the claim
 
described immediately
above.
9. Cross-border private banking matters
Credit
 
Suisse
 
offices
 
in
 
various
 
locations,
 
including
 
the
 
UK,
 
the
 
Netherlands,
 
France
 
and
 
Belgium,
 
have
 
been
contacted
 
by
 
regulatory
 
and
 
law
 
enforcement
 
authorities
 
that
 
are
 
seeking
 
records
 
and
 
information
 
concerning
investigations into Credit Suisse’s historical private banking services
 
on a cross-border basis and in part through its
local branches
 
and banks.
 
Credit Suisse has
 
conducted a
 
review of these
 
issues, the
 
UK and
 
French aspects
 
of which
have been closed, and is continuing to cooperate
 
with the authorities.
10. ETN-related litigation
XIV litigation:
Since March 14, 2018, three class
 
action complaints were filed in the SDNY on
 
behalf of a putative
class of
 
purchasers of
 
VelocityShares Daily
 
Inverse VIX Short
 
Term
 
Exchange Traded
 
Notes linked to
 
the S&P
 
500
VIX Short-Term Futures Index
 
due December
 
4, 2030
 
(XIV ETNs).
 
On August
 
20, 2018,
 
plaintiffs filed
 
a consolidated
amended class
 
action complaint,
 
naming Credit
 
Suisse Group
 
AG and
 
certain affiliates
 
and executives,
 
which asserts
claims for violations of Sections 9(a)(4), 9(f),
 
10(b) and 20(a) of the Exchange Act
 
and Rule 10b-5 thereunder and
Sections 11 and 15 of
 
the US Securities Act of
 
1933 and alleges that the defendants are
 
responsible for losses to
investors
 
following
 
a
 
decline
 
in
 
the
 
value
 
of
 
XIV
 
ETNs
 
on
 
February
 
5,
 
2018.
 
Defendants
 
moved
 
to
 
dismiss
 
the
amended complaint
 
on November
 
2, 2018.
 
On September
 
25, 2019,
 
the SDNY
 
granted defendants’
 
motion to
dismiss and
 
dismissed with
 
prejudice all
 
claims against
 
the defendants.
 
On October
 
18, 2019,
 
plaintiffs filed
 
a notice
of appeal. On April 27, 2021, the Second Circuit issued an order affirming in part
 
and vacating in part the SDNY’s
September 25,
 
2019 decision
 
granting defendants’
 
motion to
 
dismiss with
 
prejudice. On
 
July 1,
 
2022, plaintiffs
filed a motion for class certification. On March 16, 2023, the court denied plaintiffs’
 
motion to certify two of their
three
 
alleged
 
classes
 
and
 
granted
 
plaintiffs’
 
motion
 
to
 
certify
 
their
 
third
 
alleged
 
class.
 
On
 
March
 
30,
 
2023,
defendants moved
 
for reconsideration
 
and filed
 
a petition
 
for permission
 
to appeal
 
the court’s
 
March 16,
 
2023
class certification
 
decision to
 
the Second
 
Circuit. On April
 
28, 2023,
 
plaintiffs filed
 
a motion seeking
 
leave to
 
amend
their complaint. On May 15, 2023, plaintiffs filed
 
a renewed motion for class certification.
DGAZ litigation:
On January
 
6, 2022,
 
Credit Suisse AG
 
was named
 
in a
 
class action
 
complaint filed in
 
the SDNY
brought on
 
behalf of
 
a
 
putative
 
class
 
of short
 
sellers of
 
VelocityShares 3x
 
Inverse Natural
 
Gas
 
Exchange Traded
Notes linked
 
to the
 
S&P GSCI
 
Natural Gas
 
Index ER
 
due February
 
9, 2032
 
(DGAZ ETNs).
 
The complaint
 
asserts claims
for violations
 
of Section
 
10(b) of
 
the Exchange
 
Act and
 
Rule 10b-5
 
thereunder and
 
alleges that
 
Credit Suisse
 
is
responsible for losses
 
suffered by short
 
sellers following a
 
June 2020 announcement
 
that Credit Suisse would
 
delist
and suspend further issuances
 
of the DGAZ ETNs.
 
On July 11, 2022, Credit
 
Suisse AG filed a motion
 
to dismiss. On
March 31, 2023,
 
the court granted
 
Credit Suisse AG’s
 
motion to dismiss.
 
On May 2,
 
2023, the court
 
entered an
order dismissing the case with prejudice.
 
On June 1, 2023, plaintiff filed a notice
 
of appeal.
11. Bulgarian former clients matter
Credit
 
Suisse
 
AG
 
has
 
been responding
 
to an
 
investigation by
 
the
 
Swiss Office
 
of
 
the
 
Attorney General
 
(SOAG)
concerning the
 
diligence and
 
controls
 
applied
 
to a
 
historical relationship
 
with Bulgarian
 
former clients
 
who are
alleged to have laundered funds
 
through Credit Suisse AG
 
accounts. On December 17, 2020, the
 
SOAG brought
charges against Credit
 
Suisse AG and
 
other parties. Credit
 
Suisse AG believes
 
its diligence and
 
controls complied
with applicable legal
 
requirements and
 
intends to defend
 
itself vigorously.
 
The trial
 
in the
 
Swiss Federal Criminal
Court took
 
place in
 
the first
 
quarter of
 
2022. On
 
June 27,
 
2022, Credit
 
Suisse AG
 
was convicted
 
in the
 
Swiss Federal
Criminal Court
 
of certain
 
historical organizational
 
inadequacies
 
in its
 
anti-money laundering
 
framework and
 
ordered
to pay a fine of CHF
2
m.
In
 
addition, the
 
court seized
 
certain
 
client assets
 
in
 
the amount
 
of approximately
 
CHF
12
m and
 
ordered Credit
Suisse AG to pay a
 
compensatory claim in the amount of approximately CHF
19
m. On July 5, 2022,
 
Credit Suisse
AG appealed the decision to the Swiss Federal
 
Court of Appeals.
12. SCFF
Credit
 
Suisse
 
has
 
received
 
requests
 
for
 
documents and
 
information in
 
connection with
 
inquiries, investigations,
enforcement and
 
other actions
 
relating to
 
the supply chain
 
finance funds
 
(SCFF) matter by
 
FINMA, the
 
FCA and
other regulatory and governmental agencies. The Luxembourg
 
Commission de Surveillance du Secteur Financier is
reviewing the matter through a third party. Credit Suisse is cooperating with these authorities.
On February 28, 2023,
 
FINMA announced the conclusion of
 
its enforcement proceedings against Credit
 
Suisse in
connection with the SCFF matter. In its order, FINMA reported
 
that Credit Suisse had seriously breached applicable
Swiss supervisory
 
laws in
 
this context
 
with regard
 
to risk
 
management and
 
appropriate operational
 
structures. While
FINMA
 
recognized
 
that
 
Credit
 
Suisse
 
has
 
already
 
taken
 
extensive
 
organizational
 
measures
 
based
 
on
 
its
 
own
investigation into the
 
SCFF matter, particularly
 
to strengthen its
 
governance and control
 
processes, and FINMA
 
is
supportive
 
of
 
these
 
measures,
 
the
 
regulator
 
has
 
ordered
 
certain
 
additional
 
remedial
 
measures.
 
These
 
include
 
a
requirement that the most
 
important (approximately
500
) business relationships must
 
be reviewed periodically and
holistically at
 
the Executive
 
Board level,
 
in particular
 
for counterparty
 
risks, and
 
that Credit
 
Suisse must
 
set up
 
a
document defining the responsibilities of
 
approximately
600
 
of its highest-ranking managers. FINMA
 
will appoint
an audit officer to assess compliance with these
 
supervisory measures. Separate from the
 
enforcement proceeding
regarding
 
Credit
 
Suisse,
 
FINMA
 
has
 
opened
 
four
 
enforcement
 
proceedings
 
against
 
former
 
managers
 
of
 
Credit
Suisse.
Certain civil actions have
 
been filed by fund investors
 
and other parties against
 
Credit Suisse and/or certain
 
officers
and directors in various
 
jurisdictions, which make allegations including mis-selling and
 
breaches of duties of care,
diligence and other fiduciary duties. Certain investors and other private
 
parties have also filed criminal complaints
against Credit Suisse and other parties in
 
connection with this matter.
13. Archegos
Credit
 
Suisse
 
has
 
received
 
requests
 
for
 
documents
 
and
 
information
 
in
 
connection
 
with
 
inquiries,
 
investigations
and/or actions
 
relating
 
to Credit
 
Suisse’s relationship
 
with Archegos
 
Capital Management
 
(Archegos), including
from
 
FINMA (assisted
 
by
 
a third
 
party appointed
 
by
 
FINMA), the
 
DOJ,
 
the SEC,
 
the US
 
Federal Reserve,
 
the US
Commodity
 
Futures
 
Trading
 
Commission (CFTC),
 
the US
 
Senate
 
Banking Committee,
 
the
 
Prudential
 
Regulation
Authority
 
(PRA),
 
the
 
FCA,
 
COMCO,
 
the
 
Hong
 
Kong
 
Competition
 
Commission
 
and
 
other
 
regulatory
 
and
governmental agencies. Credit Suisse is cooperating
 
with the authorities in these matters.
 
On
 
July
 
24,
 
2023,
 
the
 
US
 
Federal
 
Reserve
 
and
 
the
 
PRA
 
announced resolutions
 
of
 
their
 
investigations
 
of
 
Credit
Suisse’s relationship with Archegos.
UBS Group
 
AG, Credit
 
Suisse AG,
 
Credit Suisse
 
Holdings (USA)
 
Inc., and
 
Credit Suisse
 
AG, New
 
York Branch
 
entered
into an Order to Cease and Desist with the Board of Governors of the Federal Reserve System. Under the terms
 
of
the
 
order,
 
Credit
 
Suisse
 
agreed
 
to
 
pay
 
a
 
civil
 
money
 
penalty
 
of
 
USD
269
m
 
and
 
to
 
undertake
 
certain
 
remedial
measures
 
relating
 
to
 
counterparty
 
credit
 
risk
 
management,
 
liquidity
 
risk
 
management
 
and
 
non-financial
 
risk
management, as well as enhancements to
 
board oversight and governance.
CSI
 
and
 
CSSEL
 
entered
 
into
 
a
 
settlement
 
agreement
 
with
 
the
 
PRA
 
providing
 
for
 
the
 
resolution
 
of
 
the
 
PRA’s
investigation, following which
 
the PRA
 
published a Final
 
Notice imposing a
 
financial penalty of
 
GBP
87
m on
 
CSI
and CSSEL for breaches of various of the PRA’s
 
Fundamental Rules.
FINMA also
 
entered a
 
decree dated
 
July 14,
 
2023 announcing
 
the conclusion
 
of its
 
enforcement proceeding,
 
finding
that
 
Credit
 
Suisse
 
had
 
seriously
 
violated
 
financial
 
market
 
law
 
in
 
connection
 
with
 
its
 
business
 
relationship
 
with
Archegos and ordering remedial measures directed at Credit Suisse AG and UBS Group AG, as the legal successor
to
 
Credit
 
Suisse
 
Group
 
AG.
 
These
 
include
 
a
 
requirement
 
that
 
UBS
 
Group
 
AG
 
apply
 
its
 
restrictions
 
on
 
its
 
own
positions relating to individual clients throughout the financial group, as well as adjustments to the compensation
system of
 
the entire
 
financial group
 
to provide
 
for bonus
 
allocation criteria
 
that take
 
into account
 
risk appetite.
FINMA
 
also
 
announced
 
it
 
has
 
opened
 
enforcement
 
proceedings
 
against
 
a
 
former
 
Credit
 
Suisse
 
manager
 
in
connection with this matter.
On April
 
16, 2021, Credit
 
Suisse Group AG
 
and certain current
 
and former executives
 
were named in
 
a putative
class action complaint
 
filed in the SDNY
 
by a holder of
 
Credit Suisse American
 
Depositary Receipts,
 
asserting claims
for violations of Sections
 
10(b) and 20(a) of
 
the Exchange Act and
 
Rule 10b-5 thereunder,
 
alleging that defendants
violated
 
US
 
securities
 
laws
 
by
 
making
 
material
 
misrepresentations
 
and
 
omissions
 
regarding
 
Credit
 
Suisse’s
 
risk
management practices,
 
including with
 
respect to
 
the Archegos
 
matter. On
 
September 16,
 
2022, the
 
parties reached
an agreement
 
to settle
 
all claims.
 
On December
 
23, 2022
 
and May
 
11, 2023,
 
respectively, the
 
court entered
 
an
order granting preliminary and final approval
 
to the parties’ agreement to settle
 
all claims.
Additional civil actions relating
 
to Credit Suisse’s relationship with
 
Archegos have been filed
 
against Credit Suisse
and/or certain officers and directors, including
 
claims for breaches of fiduciary duties.
14. Credit Suisse financial disclosures
Three
 
putative securities
 
class action
 
complaints have
 
been filed
 
in the
 
US District
 
Court for
 
the District
 
of New
Jersey (DNJ)
 
against Credit
 
Suisse Group
 
AG and
 
current and
 
former directors,
 
officers, and
 
executives, alleging
 
that
defendants made
 
misleading statements
 
regarding
 
customer outflows
 
in late
 
2022. Two
 
of the
 
complaints also
include allegations relating
 
to financial
 
reporting controls
 
and Credit
 
Suisse Group
 
AG’s merger with
 
UBS Group
AG. On July 7, 2023, the DNJ transferred the cases to
 
the SDNY.
Credit Suisse has received requests for documents and information from regulatory and governmental agencies in
connection with inquiries,
 
investigations and/or actions
 
relating to
 
these matters, as
 
well as
 
for other statements
regarding
 
Credit
 
Suisse’s
 
financial
 
condition,
 
including
 
from
 
the
 
SEC,
 
the
 
DOJ
 
and
 
FINMA.
 
Credit
 
Suisse
 
is
cooperating with the authorities in these matters.
15. Merger-related litigation
On May
 
28, 2023
 
and June
 
7, 2023,
 
certain Credit
 
Suisse AG
 
affiliates, as
 
well as
 
current and
 
former directors,
officers, and executives
 
were named in
 
two putative class action
 
complaints in the SDNY
 
alleging that a series
 
of
scandals and misconduct led to a loss of shareholder value and, eventually, Credit Suisse Group AG’s merger with
UBS Group
 
AG. KPMG
 
and KPMG
 
employees are
 
also named
 
as defendants.
 
The complaints
 
allege breaches
 
of
fiduciary duty under Swiss law, and civil RICO claims under United States
 
federal law.
On June
 
20, 2023,
 
a putative
 
class action
 
complaint was
 
filed in
 
the EDNY
 
against various
 
former Credit
 
Suisse
directors, officers, and executives on
 
behalf of a purported
 
class of those who
 
held Credit Suisse additional tier
 
1
capital notes between January
 
12, 2023 and March 19,
 
2023. The complaint asserts direct
 
claims under Swiss law.