Credit Suisse Investors Advised Not to Clear Board of Archegos-Related Liability
Credit Suisse Investors Advised Not to Clear Board of Archegos-Related Liability
(Bloomberg) -- Credit Suisse Group AG investors are being advised to vote against discharging the board of directors of legal liability for mistakes made in the run-up to the collapse of Archegos Capital Management, which saddled the bank with billions of dollars in losses.
Shareholder proxy advisers Glass Lewis and ISS are recommending against absolving the bank’s leadership of liability for the fiscal year 2020, according to reports obtained by Bloomberg News. Both supported a discharge for 2021 after Credit Suisse excluded the collapse of funds it ran with now-defunct Greensill Capital from the vote.
The Archegos collapse, along with the reputational damage from the liquidation of a $10 billion group of funds the lender ran with Greensill, dealt Credit Suisse its worst year since the financial crisis and prompted a management and board shakeup. The twin hits struck the bank just weeks before last year’s shareholder meeting and prompted it to withhold the vote of discharge at the time.
Credit Suisse “has suffered financial and reputational damages through its exposure to the default of the Archegos fund and the Greensill fund,” Glass Lewis wrote. “We believe shareholders could reasonably hold the board and executives accountable for the identified deficiencies in the company’s risk and control framework.”
ISS cited “a range of risk and control issues revealed by investigations and settlements, which have entailed substantial monetary and reputational costs for the company, and by extension its shareholders.”
Both proxy advisors, however, backed the bank in recommending investors reject a proposal submitted by Ethos, another shareholder advisor, and seven Swiss pension funds for a special audit into the Greensill matter.
Credit Suisse already provided “a good level of transparency” in responses to questions and a special audit’s disclosure has the potential to jeopardize recovery of funds, according to ISS.
Glass Lewis said that shareholders can reasonably expect the results of the investigation into the Greensill matter at a later date. Credit Suisse decided not to publish the findings due the legal complexities of ongoing efforts to recoup money in the funds.
The Financial Times reported earlier on the recommendations of the proxy advisers.
©2022 Bloomberg L.P.