The federal administrative court in Switzerland has received 230 complaints against the market surveillance authority over junk bonds whose value was reduced to zero during the rescue of Credit Suisse, it said on Tuesday. These complaints come from some 2,500 people who have come together to attack the decision of Finma, the policeman of the financial markets in Switzerland, detailed a spokesperson for the court to AFP, confirming press information. The court does not provide any additional details as these are ongoing legal issues that “the court will deal with when it decides”, he said. Contacted by AFP, Finma did not comment, referring to its March decision as well as to the message from the Federal Council, without commenting further.
On March 19, UBS agreed to buy its competitor Credit Suisse for 3 billion Swiss francs (an equivalent sum in euros) under pressure from the Ministry of Finance, the central bank and Finma in order to prevent the bank from collapses. To facilitate this emergency organized buyout, Finma had triggered a complete amortization of the so-called AT1 bonds, which combine complex instruments put in place after the 2008 financial crisis to strengthen the banks. Their value, amounting to 16 billion Swiss francs, was reduced to nil. This decision had caused the amazement of investors, bondholders normally arriving first in the order of repayment in the event of bankruptcy.
Since then, the revelations concerning investor complaints against Finma have multiplied. On Monday, the Financial Times reported that employees wanted to file a complaint against the financial markets policeman following the cancellation of bonuses linked to this type of obligation. The law firms Quinn Emanuel and Pallas, which already represent major investors who want to protest against this decision, have received several requests from high-ranking executives of the bank, according to the British business daily. The amount relates to some 400 million dollars in bonuses (371 million euros) linked to these bonds. The Sunday newspaper NZZ am Sonntag reported that a law firm in Japan was preparing a complaint and was trying to bring together as many aggrieved creditors as possible in order to request international arbitration proceedings against Switzerland.