A U.S. federal judge has allowed investors to proceed with securities-fraud claims stemming from Credit Suisse's 2023 AT1 bond wipeout, keeping alive a case that carries ongoing legal consequences for UBS. According to Antigua.news, Judge Colleen McMahon of the Southern District of New York issued a ruling on March 26 in Palomino Master Ltd. v. Credit Suisse Group AG, dismissing New Jersey racketeering claims while permitting claims under Section 10(b) of the Securities Exchange Act and Rule 10b-5 to move forward. She also ordered the case consolidated with related Credit Suisse securities litigation already pending in Manhattan.
The ruling does not establish that fraud occurred. It does, however, keep the core case intact. McMahon found that the plaintiffs — Palomino, Azteca and Appaloosa — had plausibly alleged domestic transactions in Credit Suisse AT1 bonds, which is sufficient at this stage to bring U.S. securities law into play. She also noted that defendants did not challenge falsity, scienter or materiality on this motion.
The case arose from the March 2023 banking crisis. Credit Suisse, Switzerland's second-largest bank, sought emergency support from the Swiss National Bank before UBS acquired it in a state-backed sale. As part of that rescue, Swiss regulator FINMA ordered the write-down of approximately CHF 16 billion in Additional Tier 1 bonds — a class of loss-absorbing bank capital instruments.
The New York litigation centres on statements made by Credit Suisse senior executives in the narrow window before that write-down. As reported by Antigua.news, former chief executive Ulrich Körner and former chairman Axel Lehmann made reassurances to markets on March 14 and 15, 2023 regarding the bank's liquidity and financial position. A March 14 fixed-income investor presentation also restated the bank's capital position and loss hierarchy. The plaintiffs allege they purchased AT1 bonds between March 14 and March 19 in reliance on those statements, only for the securities to be wiped out days later.
Judge McMahon found the complaint had done enough, for pleading purposes, to allege domestic trades. The court noted that orders were placed from New Jersey, quotes were received in U.S. dollars, payment was routed through Goldman Sachs as a U.S.-based prime broker, the executing counterparties appeared to be U.S.-based, and the bonds were trading in the United States. That combination was sufficient, in the court's view, to allow the federal fraud claims to proceed.
The judge did narrow the scope of the case. While she held that the New Jersey RICO counts were not barred by the Securities Litigation Uniform Standards Act — because the complaint concerned AT1 bonds rather than covered securities listed on a U.S. exchange — she dismissed those claims on the grounds that plaintiffs had not adequately pleaded a distinct enterprise or a racketeering conspiracy. What remains is the securities-fraud case.
UBS is not named as a defendant in the action, but it is not insulated from the corporate dimensions of the dispute. Under Swiss law, a legal entity acts through its governing bodies and is bound by their conduct. Körner and Lehmann were acting as Credit Suisse organs, and any judicial finding that they misled investors in those capacities would engage the company they represented — not only the executives themselves. UBS Group AG succeeded by operation of Swiss law to all assets and liabilities of Credit Suisse Group AG when the parent merger took effect in June 2023. When the bank merger was completed in May 2024, UBS AG succeeded to all rights and obligations of Credit Suisse AG, including its outstanding debt instruments.
Separate disclosure disputes have continued alongside the main claims. Swiss proceedings have addressed disclosure of FINMA records linked to the AT1 write-down, as well as Credit Suisse's efforts to limit access to documents tied to FINMA's March 22, 2023 order. In New York, the bondholder case has moved into discovery, with Credit Suisse and FINMA later renewing privilege-based objections.
The Swiss proceedings have also raised the broader stakes. In October 2025, the Swiss Federal Administrative Court partially revoked FINMA's March 19, 2023 AT1 write-down decree, reopening questions about the legal basis for the wipeout. Those proceedings run parallel to the New York fraud case: one track concerns the legality of the write-down itself, the other concerns what investors were told before it occurred.
For UBS, the practical effect is that the legal consequences of the 2023 rescue continue to unfold across parallel proceedings, discovery disputes and a New York fraud case that has now survived dismissal. For investors, the central question remains narrower but more pointed: whether Credit Suisse's public assurances during the critical week of March 2023 accurately reflected its internal picture of liquidity stress and the official support it was seeking.
