While it may or may not be true, as some have said, that “everything is securities fraud,” it certainly does seem to be the case that there is not an event or development that occurs that does not eventually draw a securities lawsuit. For that reason, I was pretty sure that eventually we would see securities litigation relating to the Russian invasion of Ukraine. Well, as it has turned out, at least one securities lawsuit has now been filed based on circumstances relating to the war in Ukraine. Late last week, a plaintiff shareholder filed a securities class action lawsuit against Credit Suisse Group based on allegations concerning the enforcement of economic sanctions imposed on Russian oligarchs in the wake of the Russian invasion. A copy of the plaintiff’s April 29, 2022 complaint can be found here.



Credit Suisse is a global financial institution based in Zurich, Switzerland. According to the recently filed securities suit complaint, “Credit Suisse has a history of business dealings with Russian oligarchs or ultra-high net worth business leaders possessing significant political influence.”


According to a February 7, 2022 Financial Times article (here), entitled “Credit Suisse Securitizes Yacht Loans to Oligarchs and Tycoons,” and which the complaint cites, Credit Suisse sold off $80 million worth of risk related to a $2 billion portfolio of loans backed by assets owned by certain of the bank’s ultra-high net worth clients (the “Securitization Deal”). The article also disclosed that in 2017 and 2018 the company experienced 12 defaults on yacht and aircraft loans, a third of which were related to U.S. sanctions against Russian oligarchs.


According to the complaint, later in February, after Russia’s February 24, 2022 launch of its invasion of Ukraine, and after the U.S. and other Western countries imposed sanctions on Russia and Russian individuals, “news outlets reported that Credit Suisse had requested non-participating investors who received information about the Company’s loan portfolio to destroy and permanently erase any confidential information that Credit Suisse provided to them regarding the Securitization Deal.”


On March 28, 2022, the U.S. House of Representatives Committee on Oversight and Reform sent Credit Suisse a letter asking the company to turn over information and documents about a portfolio of loans backed by yachts and private jets owned by clients, potentially including Russian individuals. The letter specifically raised questions about Credit’s Suisse’s alleged request that hedge funds and other non-participating investors “destroy documents” related to yachts and private jets owned by the bank’s clients. The letter stated that “given the timing of this request and its subject matter,” Credit Suisse’s action “raises significant concerns that it may be concealing information” about whether participants in the deal may be “evading sanctions” imposed by the West after Russia’s invasion of Ukraine.


According to the subsequently filed securities class action complaint, the company’s share price fell 2.58% on this news.


The Lawsuit

On April 29, 2022, a plaintiff shareholder filed a securities class action lawsuit in the Eastern District of New York against Credit Suisse, its CEO and its CFO. The complaint purports to be filed on behalf of a class of persons who purchased Credit Suisse securities between March 19, 2021 (the date the company filed its Annual Report on Form 20-F, in which the company made statements concerning U.S. regulations pertaining to sanctions on Russian persons and entities) and March 25, 2022 (the trading date before the Congressional letter was sent).


The complaint alleges that during the class period the defendants made false and/or misleading statements and/or failed to disclose that:


(i) Credit Suisse had deficient disclosure controls and procedures and internal control over financial reporting; (ii) Credit Suisse’s practice of lending money to Russian oligarchs subject to U.S. and international sanctions created a significant risk of violating rules pertaining to those sanctions and future sanctions; (iii) the foregoing conduct subjected the Company to an increased risk of heightened regulatory scrutiny and/or enforcement activity; (iv) the Securitization Deal concerned loans that Credit Suisse made to Russian oligarchs previously sanctioned by the U.S.; (v) the purpose of the Securitization Deal was to offload the risks associated with these loans and mitigate the impact on Credit Suisse of sanctions likely to be implemented by Western nations in response to Russia’s invasion of Ukraine; (vi) Credit Suisse’s request that non-participating investors destroy documents related to the Securitization Deal was intended to conceal the Company’s noncompliance with U.S. and international sanctions in lending practices; (vii) the foregoing, once revealed, was likely to subject the Company to enhanced regulatory scrutiny and significant reputational harm; and (viii) as a result, the Company’s public statements were materially false and misleading at all relevant times.


The complaint alleges that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint seeks to recover damages on behalf of the plaintiff class.



The allegations in this complaint depend heavily on some as yet unproven charges that Credit Suisse engaged in supposedly shady stuff having to do with Russian oligarchs. These underlying unproven charges, if substantiated, may or may not amount to violations of laws and regulations concerning economic sanctions. However, even if these violations are established, that does not necessarily make any of this into securities fraud.


The plaintiff in this case is clearly trying to bootstrap some bad sounding stuff about the defendant company and leverage it into supposed violations of the securities laws. The allegations in the complaint are a murky mix of inferences and implications relating to sanctions imposed in prior years; suggestions and suppositions about the company’s lending activities to Russian oligarchs; and an as yet unproved charge that the company asked some of its clients to destroy documents about its lending activities. It sounds bad, or at least so the plaintiffs’ attorneys hope. The complaint seems like a gesture toward trying to suggest that the company is bad and that’s reason enough to hold the defendants liable for securities fraud.


In response to the inevitable motion to dismiss in this case, the plaintiff will face significant challenges establishing falsity, materiality, scienter, and loss causation. (Indeed, between now and the time the motions to dismiss are heard, the plaintiff will need to refine his theory of exactly what prior statements were misleading and how those statements relate to the later “revelations.”) Given the minimal size of the share price decline after the supposed “revelations,” the plaintiff will face significant hurdles showing materiality and loss causation. The minimal size of the share price decline also belies the complaint’s breathless attempt to imply that the underlying allegations are very very bad indeed.


All of that said, it should be noted that the complaint has only just been filed and how the complaint ultimately will fare remains to be seen. Regardless of the merits (or lack thereof) of the complaint, the significance of this lawsuit has less to do with the details of the allegations and more to do with the subject of the lawsuit.


As I noted at the outset, the significance of this lawsuit is that it is the first to be filed (so far) based on circumstances relating to the war in Ukraine. Time will tell whether or not there will be further Ukrainian war-related securities lawsuit. But the very fact that his lawsuit was even filed shows the extent to which securities litigation as a general matter is now dominated by event-driven securities suits.


I am old enough to remember when securities litigation was about allegations of financial fraud. We seem to have reached the point where any putative violation of any law or regulation is simultaneously a violation of the securities laws – or so the plaintiffs’ lawyers seem to want to try to suggest. In any event, it does seem as if, as far as the plaintiffs’ lawyers are concerned, every event or development presents an opportunity for securities litigation.