Zacks Investment Research | Sep 27, 2019 08:10AM ET
Per a Reuters article, Credit Suisse (SIX:CSGN) (NYSE:CS) was able to put behind three pending lawsuits that charged it of having mislead investors regarding a complex product — VelocityShares Daily Inverse VIX Short-Term Exchange-Traded Notes (XIV Notes).
XIV Notes — a popular product offered by the bank — were linked to expectations of future price swings. The notes were designed to produce opposite returns of Cboe Volatility Index, thus these sank more than 90% following a market selloff in February 2018, post which Credit Suisse took the product off market.
Investors filed a lawsuit against the bank stating that it manipulated the notes by liquidating its holdings in various financial products to avoid a loss. It also said the company’s statements about the product to investors were incomplete.
The U.S. District judge dismissed the cases stating the company had sufficiently warned investors about the downsides involved in these notes. Also, it was ruled that Credit Suisse’s move to purchase a huge bunch of futures contracts was backed by no wrong intentions, rather to take advantage of favorable market conditions.
Our Take
Credit Suisse remains involved in a number of regulatory and legal proceedings. In its latest quarterly filing, the company estimated that the aggregate range of loss not covered by existing litigation provisions could go as high as CHF 1.4 billion.
Nevertheless, Credit Suisse is well poised to reap benefits from the three-year restructuring overhaul it successfully completed in 2018. Also, it continues to bolster its wealth management business by expanding presence.
The stock has gained 12.2% over the past six months against 0.7% decline recorded by the Zacks Investment Research
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.