Credit Suisse Group AG bondholders, representing $4.5 billion of the $17 billion of wiped-out Additional Tier 1 bonds of the company, have filed a lawsuit against Switzerland’s banking regulator, the Financial Times reported on Friday.
The complaint says the regulator, Finma, acted unconstitutionally when it ordered Credit Suisse to cancel the AT1 debt, the FT report said.
This move by the Swiss regulator in mid-March angered bondholders who thought they would be better protected than shareholders in a rescue deal with UBS earlier in the month.
Credit Suisse says $17B of its debt now worthless, angering bondholders
The lawsuit was filed by the law firm Quinn Emanuel in the city of St. Gallen in eastern Switzerland on Wednesday, FT said.
The bondholder group holds a “significant” percentage of the total notional value of the bonds, Quinn Emanuel said earlier this month when it was hired by the bondholders group.
Why markets are in uproar over a risky bank bond known as AT1
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