XML 35 R26.htm IDEA: XBRL DOCUMENT v3.24.2.u1
Litigation, regulatory and similar matters
 6 Months Ended
Jun. 30, 2024
Disclosure Of Litigation Regulatory And Similar Matters [Line Items]  
Disclosure Of Contingent Liabilities Explanatory
Note 15
 
Provisions and contingent liabilities
 
(continued)
b) Litigation, regulatory and similar matters
The Group operates in
 
a legal and regulatory
 
environment that exposes it to
 
significant litigation and similar risks
arising from disputes
 
and regulatory proceedings. As
 
a result,
 
UBS (which for
 
purposes of this
 
Note may
 
refer to
UBS
 
Group
 
AG
 
and/or
 
one
 
or
 
more
 
of
 
its
 
subsidiaries,
 
as
 
applicable)
 
is
 
involved
 
in
 
various
 
disputes
 
and
 
legal
proceedings, including litigation, arbitration,
 
and regulatory and criminal investigations.
Such matters are subject
 
to many uncertainties,
 
and the outcome and the
 
timing of resolution are
 
often difficult to
predict,
 
particularly in
 
the
 
earlier
 
stages
 
of
 
a
 
case.
 
There
 
are
 
also
 
situations
 
where
 
the Group
 
may
 
enter into
 
a
settlement
 
agreement.
 
This
 
may
 
occur
 
in
 
order
 
to
 
avoid
 
the
 
expense,
 
management
 
distraction
 
or
 
reputational
implications of
 
continuing to
 
contest liability,
 
even
 
for those
 
matters for
 
which
 
the Group
 
believes it
 
should be
exonerated. The uncertainties inherent in all such matters affect the amount and timing of any potential outflows
for both matters
 
with respect to
 
which provisions have
 
been established and
 
other contingent liabilities.
 
The Group
makes
 
provisions
 
for
 
such
 
matters
 
brought
 
against
 
it
 
when,
 
in
 
the
 
opinion
 
of
 
management
 
after
 
seeking legal
advice, it
 
is more
 
likely than
 
not that
 
the Group
 
has a
 
present legal
 
or constructive obligation
 
as a
 
result of
 
past
events, it
 
is probable
 
that an
 
outflow of
 
resources will
 
be required,
 
and the
 
amount can
 
be reliably
 
estimated. Where
these factors
 
are
 
otherwise satisfied,
 
a
 
provision may
 
be
 
established for
 
claims that
 
have
 
not
 
yet been
 
asserted
against the
 
Group, but
 
are nevertheless
 
expected to
 
be, based
 
on
 
the Group’s
 
experience with
 
similar asserted
claims.
 
If
 
any
 
of
 
those
 
conditions
 
is
 
not
 
met,
 
such
 
matters
 
result
 
in
 
contingent
 
liabilities.
 
If
 
the
 
amount
 
of
 
an
obligation cannot
 
be reliably
 
estimated, a
 
liability exists
 
that is
 
not recognized
 
even if
 
an outflow
 
of resources
 
is
probable. Accordingly, no
 
provision is
 
established even if
 
the potential
 
outflow of resources
 
with respect
 
to such
matters could be significant. Developments relating to a matter that occur after the relevant reporting period, but
prior
 
to
 
the
 
issuance
 
of
 
financial
 
statements, which
 
affect
 
management’s assessment
 
of
 
the
 
provision
 
for
 
such
matter
 
(because,
 
for
 
example,
 
the
 
developments provide
 
evidence of
 
conditions that
 
existed
 
at
 
the
 
end
 
of
 
the
reporting
 
period),
 
are
 
adjusting
 
events
 
after
 
the
 
reporting period
 
under
 
IAS
 
10
 
and
 
must
 
be
 
recognized in
 
the
financial statements for the reporting period.
Specific litigation, regulatory and other matters are
 
described below, including all such matters that
 
management
considers to be material and others that management believes to be of significance to the Group due to potential
financial,
 
reputational
 
and
 
other
 
effects.
 
The
 
amount
 
of
 
damages
 
claimed,
 
the
 
size
 
of
 
a
 
transaction
 
or
 
other
information is
 
provided where
 
available and
 
appropriate in order
 
to assist
 
users in
 
considering the
 
magnitude of
potential exposures.
In the case of certain matters below, we state that we have established a provision, and for the other matters, we
make no such statement. When we
 
make this statement and we expect
 
disclosure of the amount of a provision
 
to
prejudice seriously our
 
position with other
 
parties in the
 
matter because it
 
would reveal what
 
UBS believes to
 
be
the
 
probable
 
and
 
reliably estimable
 
outflow, we
 
do
 
not
 
disclose
 
that amount.
 
In
 
some
 
cases we
 
are
 
subject to
confidentiality obligations
 
that preclude
 
such disclosure.
 
With respect
 
to the
 
matters for
 
which we
 
do not
 
state
whether we have
 
established a provision,
 
either: (a) we
 
have not established
 
a provision; or
 
(b) we have
 
established
a provision
 
but expect
 
disclosure of
 
that fact
 
to prejudice
 
seriously our
 
position with
 
other parties
 
in the
 
matter
because it would reveal the fact that
 
UBS believes an outflow of resources to be probable
 
and reliably estimable.
With respect to certain litigation, regulatory
 
and similar matters for which we
 
have established provisions, we are
able to
 
estimate the expected
 
timing of outflows.
 
However, the aggregate
 
amount of the
 
expected outflows for
those matters for which we
 
are able to estimate expected
 
timing is immaterial relative to
 
our current and expected
levels of liquidity over the relevant time periods.
 
The
 
aggregate
 
amount
 
provisioned
 
for
 
litigation,
 
regulatory
 
and
 
similar
 
matters
 
as
 
a
 
class
 
is
 
disclosed
 
in
 
the
“Provisions” table in Note 15a above. UBS provides
 
below an estimate of the aggregate liability for
 
our litigation,
regulatory and
 
similar matters
 
as a
 
class of
 
contingent liabilities.
 
Estimates of
 
contingent liabilities
 
are inherently
imprecise and
 
uncertain as
 
these
 
estimates require UBS
 
to
 
make speculative
 
legal assessments
 
as
 
to claims
 
and
proceedings that involve
 
unique fact patterns
 
or novel legal
 
theories, that have
 
not yet been
 
initiated or are
 
at early
stages of
 
adjudication, or
 
as to
 
which
 
alleged damages
 
have
 
not been
 
quantified by
 
the claimants.
 
Taking into
account these uncertainties
 
and the other factors
 
described herein, UBS
 
estimates the future losses
 
that could arise
from litigation,
 
regulatory and
 
similar matters
 
disclosed below
 
for which
 
an estimate
 
is possible,
 
that are
 
not covered
by existing
 
provisions (including
 
provisions established
 
under IFRS
 
3 in
 
connection with
 
the acquisition
 
of Credit
Suisse), are in the range of USD
0
bn to USD
1.7
bn.
 
Litigation, regulatory
 
and similar
 
matters may
 
also result
 
in non-monetary
 
penalties and
 
consequences. A
 
guilty plea
to, or conviction of, a crime could have material consequences for UBS. Resolution of regulatory proceedings may
require UBS to obtain waivers of regulatory disqualifications to maintain certain operations, may entitle regulatory
authorities to limit, suspend or terminate
 
licenses and regulatory authorizations, and may
 
permit financial market
utilities to
 
limit, suspend
 
or terminate
 
UBS’s participation
 
in such
 
utilities. Failure
 
to obtain
 
such waivers,
 
or any
limitation, suspension
 
or termination
 
of licenses,
 
authorizations or
 
participations, could
 
have material
 
consequences
for UBS.
The amounts
 
shown in
 
the table below
 
reflect the
 
provisions recorded
 
under IFRS
 
Accounting Standards
 
accounting
principles.
 
In
 
connection
 
with
 
the
 
acquisition
 
of
 
Credit
 
Suisse,
 
UBS
 
Group
 
AG
 
additionally
 
has
 
reflected
 
in
 
its
purchase accounting under IFRS 3 a
 
valuation adjustment reflecting an estimate
 
of outflows relating to contingent
liabilities for all present
 
obligations included in the scope
 
of the acquisition at
 
fair value upon closing, even
 
if it is
not
 
probable
 
that
 
the
 
contingent
 
liability
 
will
 
result
 
in
 
an
 
outflow
 
of
 
resources,
 
significantly
 
decreasing
 
the
recognition threshold for
 
litigation liabilities beyond
 
those that generally
 
apply under IFRS
 
Accounting Standards.
The
 
IFRS
 
3
 
acquisition-related contingent
 
liabilities
 
of USD
2.6
bn
 
at
 
30
 
June
 
2024 reflect
 
updated
 
estimates of
outflows,
 
including
 
an
 
increase
 
of
 
USD
0.2
bn
 
in
 
IFRS
 
3
 
measurement
 
period
 
adjustments
 
following
 
additional
information about
 
circumstances existing
 
on the
 
acquisition date,
 
shifts to
 
provisions under
 
IAS 37
 
and releases
upon resolution of the relevant matter.
 
 
 
 
 
 
 
 
 
 
Provisions for litigation, regulatory and similar matters,
 
by business division and in Group Items
1
USD m
Global Wealth
Management
Personal &
Corporate
Banking
 
Asset
Management
Investment
Bank
Non-core
and Legacy
Group Items
UBS Group
Balance as of 31 December 2023
1,235
157
15
294
2,186
134
4,020
Balance as of 31 March 2024
1,201
152
2
288
2,142
134
3,920
Increase in provisions recognized in the income statement
28
0
0
6
0
3
37
Release of provisions recognized in the income statement
(11)
0
0
(7)
(22)
0
(41)
Reclassification of IFRS 3 contingent liabilities to IAS 37 provisions
2
0
0
0
0
1,171
0
1,171
Provisions used in conformity with designated purpose
2
(10)
0
0
(5)
(1,425)
(1)
(1,442)
Foreign currency translation and other movements
(8)
(1)
0
(1)
(4)
0
(15)
Balance as of 30 June 2024
1,199
152
2
280
1,862
135
3,630
1 Provisions, if any,
 
for the matters
 
described in items 2
 
and 10 of this
 
Note are recorded
 
in Global Wealth
 
Management. Provisions,
 
if any, for
 
the matters described
 
in items 5, 6,
 
7, 8, 9 and
 
11 of this Note
 
are
recorded in Non-core and Legacy. Provisions, if any, for the matters described
 
in items 13 and 14 of
 
this Note are recorded in Group Items. Provisions, if any, for the matters
 
described in item 1 of this
 
Note are allocated
between Global Wealth Management,
 
Personal & Corporate
 
Banking and Non-core and
 
Legacy. Provisions,
 
if any, for
 
the matters described in item
 
3 of this Note are
 
allocated between the Investment Bank,
 
Non-
core and Legacy and Group Items.
 
Provisions, if any,
 
for the matters described in item 4 of
 
this Note are allocated between Global
 
Wealth Management and Personal
 
& Corporate Banking. Provisions,
 
if any, for the
matters described in item 12 of this Note are allocated between the Investment
 
Bank and Non-core and Legacy.
 
2 During the second quarter of 2024, UBS agreed to fund an offer
 
by the Credit Suisse supply chain
finance funds to
 
redeem all of
 
the outstanding units
 
of the respective
 
funds. As
 
a result, UBS
 
reclassified USD
944
m from IFRS
 
3 acquisition-related contingent
 
liabilities to IAS
 
37 provisions related
 
to litigation,
regulatory and similar matters, as the
 
probability of an outflow of resources increased,
 
bringing the total IAS 37 provision for
 
this matter to USD
1,421
m, with no impact on the income
 
statement. The provision has
been used to recognize the funding obligation, which was accounted for as a derivative liability with a fair value
 
of USD
1,421
m as of 30 June 2024.
1. Inquiries regarding cross-border wealth management
 
businesses
 
Tax
 
and regulatory
 
authorities in
 
a number
 
of countries
 
have made
 
inquiries, served
 
requests for
 
information or
examined
 
employees
 
located
 
in
 
their
 
respective
 
jurisdictions
 
relating
 
to
 
the
 
cross-border
 
wealth
 
management
services provided by
 
UBS and
 
other financial
 
institutions. Credit Suisse
 
offices in various
 
locations, including
 
the UK,
the Netherlands, France and
 
Belgium, have been contacted
 
by regulatory and law enforcement
 
authorities seeking
records and information
 
concerning investigations
 
into Credit
 
Suisse’s historical
 
private banking
 
services on a
 
cross-
border basis and
 
in part through
 
its local branches
 
and banks.
 
The UK and
 
French aspects of
 
these issues have
 
been
closed. UBS is continuing to cooperate with
 
the authorities.
Since 2013, UBS
 
(France) S.A., UBS AG
 
and certain former employees
 
have been under investigation in
 
France in
relation to UBS’s cross-border business with French
 
clients. In connection with this investigation, the investigating
judges ordered UBS AG to provide bail (“
caution
”) of EUR
1.1
bn.
In 2019,
 
the court of
 
first instance
 
returned a verdict
 
finding UBS AG
 
guilty of
 
unlawful solicitation of
 
clients on
French territory and aggravated
 
laundering of the proceeds
 
of tax fraud, and UBS
 
(France) S.A. guilty of aiding
 
and
abetting unlawful
 
solicitation and
 
of laundering
 
the proceeds
 
of tax
 
fraud. The
 
court imposed
 
fines aggregating
EUR
3.7
bn on UBS AG and UBS (France) S.A. and awarded EUR
800
m of civil damages to the French state. A trial
in the
 
Paris Court
 
of Appeal
 
took place
 
in March
 
2021. In
 
December 2021,
 
the Court
 
of Appeal
 
found UBS
 
AG
guilty of unlawful solicitation and aggravated laundering of the proceeds of tax fraud. The court ordered a fine of
EUR
3.75
m,
 
the
 
confiscation
 
of
 
EUR
1
bn,
 
and
 
awarded
 
civil
 
damages
 
to
 
the
 
French
 
state
 
of
 
EUR
800
m.
 
UBS
appealed the decision to the
 
French Supreme Court. The Supreme
 
Court rendered its judgment on
 
15 November
2023. It
 
upheld the
 
Court of
 
Appeal‘s decision regarding
 
unlawful solicitation and
 
aggravated laundering of
 
the
proceeds of tax fraud, but overturned the confiscation of EUR
1
bn, the penalty of EUR
3.75
m and the EUR
800
m
of civil
 
damages awarded
 
to the
 
French state.
 
The case
 
has been
 
remanded to
 
the Court
 
of Appeal
 
for a
 
retrial
regarding these overturned elements.
 
The French state has reimbursed the
 
EUR
800
m of civil damages to UBS AG.
In
 
May
 
2014,
 
Credit
 
Suisse
 
entered
 
into
 
settlement
 
agreements
 
with
 
the
 
SEC,
 
Federal
 
Reserve
 
and
 
New
 
York
Department of
 
Financial
 
Services and
 
plead
 
guilty
 
to conspiring
 
to
 
aid
 
and
 
abet US
 
taxpayers
 
in
 
filing
 
false
 
tax
returns. Credit Suisse continued to report
 
to and cooperate with US authorities in
 
accordance with its obligations
under the
 
plea and
 
agreements, including
 
by conducting
 
a review
 
of cross-border
 
services provided
 
by Credit
 
Suisse.
In this connection,
 
Credit Suisse provided information to US authorities regarding potentially undeclared
 
US assets
held by clients at
 
Credit Suisse since the
 
May 2014 plea. UBS
 
continues to cooperate with the
 
authorities in their
ongoing reviews. In
 
March 2023, the US
 
Senate Finance Committee
 
issued a report
 
criticizing Credit Suisse
 
AG’s
history regarding
 
US tax
 
compliance. The
 
report called
 
on the
 
DOJ to
 
investigate Credit
 
Suisse AG’s
 
compliance
with the 2014 plea.
In February 2021, a
 
qui tam complaint was filed
 
in the Eastern District of
 
Virginia, alleging that Credit Suisse had
violated the
 
False Claims Act
 
by failing
 
to disclose
 
all US
 
accounts at
 
the time
 
of the
 
2014 plea,
 
which allegedly
allowed Credit Suisse to pay a criminal fine
 
in 2014 that was purportedly lower
 
than it should have been. The DOJ
moved to
 
dismiss the
 
case, and
 
the Court
 
summarily dismissed
 
the suit.
 
The case
 
is now
 
on appeal
 
with the
 
US
Federal Court of Appeals for the Fourth Circuit.
Our balance sheet at 30
 
June 2024 reflected a
 
provision in an amount that
 
UBS believes to be
 
appropriate under
the applicable accounting standard. As in the case of other matters for
 
which we have established provisions, the
future
 
outflow of
 
resources in
 
respect of
 
such
 
matters cannot
 
be
 
determined with
 
certainty based
 
on
 
currently
available information
 
and accordingly
 
may ultimately
 
prove to
 
be substantially
 
greater (or
 
may be
 
less) than
 
the
provision that we have recognized.
2. Madoff
In relation to
 
the Bernard
 
L. Madoff Investment
 
Securities LLC
 
(BMIS) investment
 
fraud, UBS
 
AG, UBS (Luxembourg)
S.A. (now UBS
 
Europe SE, Luxembourg
 
branch) and certain
 
other UBS subsidiaries have
 
been subject to
 
inquiries
by a
 
number of
 
regulators, including
 
the Swiss
 
Financial Market
 
Supervisory Authority
 
(FINMA) and
 
the Luxembourg
Commission
 
de
 
Surveillance
 
du
 
Secteur
 
Financier.
 
Those
 
inquiries
 
concerned
 
two
 
third-party
 
funds
 
established
under Luxembourg
 
law,
 
substantially all
 
assets of
 
which were
 
with BMIS,
 
as well
 
as certain
 
funds established
 
in
offshore
 
jurisdictions
 
with
 
either
 
direct
 
or
 
indirect
 
exposure
 
to
 
BMIS.
 
These
 
funds
 
faced
 
severe
 
losses,
 
and
 
the
Luxembourg funds are in liquidation. The documentation establishing both funds identifies UBS entities in various
roles,
 
including custodian,
 
administrator,
 
manager,
 
distributor and
 
promoter,
 
and indicates
 
that UBS
 
employees
serve as board members.
In 2009 and 2010, the liquidators
 
of the two Luxembourg funds
 
filed claims against UBS entities,
 
non-UBS entities
and certain individuals, including
 
current and former UBS employees,
 
seeking amounts totaling approximately
 
EUR
2.1
bn, which
 
includes amounts
 
that the
 
funds may
 
be held
 
liable to
 
pay the
 
trustee for
 
the liquidation
 
of BMIS
(BMIS Trustee).
A large number of alleged beneficiaries have filed claims
 
against UBS entities (and non-UBS entities) for purported
losses relating to
 
the Madoff fraud.
 
The majority of
 
these cases have
 
been filed in
 
Luxembourg, where decisions
that the claims in eight test cases were inadmissible have been affirmed by the Luxembourg Court of Appeal, and
the Luxembourg Supreme Court has dismissed
 
a further appeal in one of the test
 
cases.
In the
 
US, the
 
BMIS Trustee
 
filed claims
 
against UBS
 
entities, among
 
others, in
 
relation to
 
the two
 
Luxembourg
funds and one of
 
the offshore funds. The
 
total amount claimed against
 
all defendants in
 
these actions was
 
not less
than USD
2
bn. In
 
2014, the
 
US Supreme
 
Court rejected
 
the BMIS
 
Trustee’s motion for
 
leave to
 
appeal decisions
dismissing all
 
claims against
 
UBS defendants
 
except those
 
for the
 
recovery of
 
approximately USD
125
m of
 
payments
alleged to be
 
fraudulent conveyances
 
and preference
 
payments. Similar
 
claims have
 
been filed against
 
Credit Suisse
entities seeking to recover
 
redemption payments. In
 
2016, the bankruptcy
 
court dismissed these
 
claims against the
UBS entities and
 
most of
 
the Credit
 
Suisse entities.
 
In 2019, the
 
Court of Appeals
 
reversed the
 
dismissal of
 
the BMIS
Trustee’s remaining claims. The case has been
 
remanded to the Bankruptcy Court
 
for further proceedings.
3. Foreign exchange, LIBOR and benchmark rates,
 
and other trading practices
Foreign exchange-related regulatory matters:
 
Beginning in 2013, numerous authorities commenced investigations
concerning possible
 
manipulation of
 
foreign
 
exchange markets
 
and
 
precious
 
metals prices.
 
As
 
a
 
result
 
of these
investigations,
 
UBS
 
entered
 
into
 
resolutions
 
with
 
Swiss,
 
US
 
and
 
United
 
Kingdom
 
regulators
 
and
 
the
 
European
Commission. UBS
 
was granted
 
conditional immunity
 
by the Antitrust
 
Division of
 
the DOJ
 
and by
 
authorities in
 
other
jurisdictions
 
in
 
connection
 
with
 
potential
 
competition
 
law
 
violations
 
relating
 
to
 
foreign
 
exchange
 
and
 
precious
metals businesses. In December 2021, the European Commission issued a
 
decision imposing a fine of EUR
83.3
m
on
 
Credit
 
Suisse
 
entities based
 
on
 
findings of
 
anticompetitive practices
 
in
 
the foreign
 
exchange
 
market. Credit
Suisse has
 
appealed the
 
decision to
 
the European
 
General Court.
 
UBS received
 
leniency and
 
accordingly no
 
fine
was assessed.
Foreign exchange-related civil litigation:
 
Putative class actions have been filed since 2013 in US federal
 
courts and
in
 
other
 
jurisdictions
 
against
 
UBS,
 
Credit
 
Suisse
 
and
 
other
 
banks
 
on
 
behalf
 
of
 
putative
 
classes
 
of
 
persons
 
who
engaged in foreign currency
 
transactions with any of the
 
defendant banks. UBS has resolved
 
US federal court class
actions relating to foreign currency transactions with the defendant banks and persons who
 
transacted in foreign
exchange futures
 
contracts and
 
options on
 
such futures
 
under a settlement
 
agreement that
 
provides for UBS
 
to pay
an aggregate of USD
141
m. Certain class members have excluded themselves from that settlement and
 
have filed
individual actions
 
in US and
 
English courts against
 
UBS, Credit Suisse
 
and other banks,
 
alleging violations
 
of US and
European competition
 
laws and
 
unjust enrichment.
 
UBS and
 
the other
 
banks have
 
resolved those
 
individual matters.
In
 
2015, a
 
putative
 
class action
 
was filed
 
in
 
federal court
 
against UBS
 
and numerous
 
other banks
 
on
 
behalf of
persons and
 
businesses in
 
the US
 
who directly
 
purchased foreign
 
currency from
 
the defendants
 
and alleged
 
co-
conspirators for
 
their own
 
end use.
 
In May 2024,
 
the Second
 
Circuit upheld
 
the district
 
court’s dismissal
 
of the
 
case.
Credit Suisse
 
and UBS,
 
together with
 
other financial
 
institutions, were
 
named in
 
a consolidated
 
putative class
 
action
in Israel, which made allegations
 
similar to the consolidated class action. In
 
April 2022, Credit Suisse entered into
an agreement to settle all claims. The settlement
 
remains subject to court approval.
LIBOR and other benchmark-related regulatory
 
matters:
 
Numerous government agencies conducted investigations
regarding potential improper attempts by UBS, among others, to manipulate LIBOR and other benchmark rates at
certain
 
times.
 
UBS
 
and
 
Credit
 
Suisse
 
reached
 
settlements
 
or
 
otherwise
 
concluded
 
investigations
 
relating
 
to
benchmark interest
 
rates with
 
the investigating
 
authorities. UBS
 
was granted
 
conditional leniency
 
or conditional
immunity
 
from
 
authorities
 
in
 
certain
 
jurisdictions,
 
including
 
the
 
Antitrust
 
Division
 
of
 
the
 
DOJ
 
and
 
the
 
Swiss
Competition Commission (WEKO), in
 
connection with potential
 
antitrust or competition
 
law violations related
 
to
certain rates.
 
However, UBS
 
has not
 
reached a
 
final settlement
 
with WEKO,
 
as the
 
Secretariat of
 
WEKO has
 
asserted
that UBS does not qualify for full immunity.
LIBOR and
 
other benchmark-related
 
civil litigation:
 
A number
 
of putative
 
class actions
 
and other
 
actions are
 
pending
in the federal
 
courts in New
 
York against UBS
 
and numerous other banks
 
on behalf of
 
parties who transacted in
certain interest rate benchmark-based derivatives. Also
 
pending in the US
 
and in other jurisdictions are
 
a number
of other
 
actions asserting losses
 
related to
 
various products whose
 
interest rates were
 
linked to
 
LIBOR and other
benchmarks, including
 
adjustable rate
 
mortgages, preferred
 
and debt securities,
 
bonds pledged
 
as collateral, loans,
depository
 
accounts,
 
investments
 
and
 
other
 
interest-bearing
 
instruments.
 
The
 
complaints
 
allege
 
manipulation,
through various
 
means, of
 
certain benchmark
 
interest rates,
 
including USD LIBOR,
 
Yen LIBOR,
 
EURIBOR, CHF LIBOR,
GBP LIBOR and seek unspecified compensatory
 
and other damages under various
 
legal theories.
USD LIBOR class and individual actions in the
 
US:
Beginning in 2013, putative class actions
 
were filed in US federal
district
 
courts
 
(and
 
subsequently
 
consolidated
 
in
 
the
 
SDNY)
 
by
 
plaintiffs
 
who
 
engaged
 
in
 
over-the-counter
instruments,
 
exchange
 
traded
 
Eurodollar
 
futures
 
and
 
options,
 
bonds
 
or
 
loans
 
that
 
referenced
 
USD LIBOR.
 
The
complaints allege
 
violations of
 
antitrust law
 
and the
 
Commodities Exchange
 
Act, as
 
well breach
 
of contract
 
and
unjust enrichment. Following various rulings
 
by the district court
 
and the Second Circuit
 
dismissing certain of the
causes of action and allowing others to proceed, one class
 
action with respect to transactions in over the counter
instruments and several actions brought by
 
individual plaintiffs are proceeding in
 
the district court. UBS and Credit
Suisse
 
have
 
entered
 
into
 
settlement
 
agreements
 
in
 
respect
 
of
 
the
 
class
 
actions
 
relating
 
to
 
exchange
 
traded
instruments, bonds and loans.
 
The exchange traded instruments
 
settlement received preliminary
 
approval from the
court in
 
April 2024.
 
The bondholder
 
and lender
 
action settlements
 
received final
 
court approval
 
and have
 
been
dismissed as
 
to UBS
 
and Credit
 
Suisse. In
 
addition, an
 
individual action
 
was filed
 
in the
 
Northern District
 
of California
against UBS, Credit
 
Suisse and numerous
 
other banks alleging
 
that the defendants
 
conspired to fix
 
the interest rate
used as the basis for
 
loans to consumers by
 
jointly setting the USD ICE
 
LIBOR rate and monopolized
 
the market for
LIBOR-based consumer
 
loans and
 
credit cards. The
 
court dismissed the
 
initial complaint
 
and subsequently
 
dismissed
an amended complaint with
 
prejudice. In January 2024,
 
plaintiffs appealed the dismissal
 
to the Ninth Circuit
 
Court
of Appeals.
Other benchmark
 
class actions
 
in the
 
US:
The Yen
 
LIBOR/Euroyen TIBOR,
 
EURIBOR and
 
GBP LIBOR
 
actions
 
have
been
 
dismissed.
 
The
 
dismissal of
 
Yen
 
LIBOR/Euroyen TIBOR
 
could be
 
appealed and
 
plaintiffs have
 
appealed the
dismissal of the EURIBOR and GBP LIBOR actions.
In November 2022, defendants have moved to dismiss the
 
complaint in the CHF LIBOR action. In
 
2023, the court
approved a settlement by Credit Suisse of the
 
claims against it in this matter.
Government bonds:
 
In 2021,
 
the European
 
Commission issued
 
a decision
 
finding that
 
UBS and
 
six other
 
banks
breached European
 
Union antitrust
 
rules between
 
2007 and
 
2011 relating
 
to European
 
government bonds. The
European
 
Commission
 
fined
 
UBS
 
EUR.
 
UBS
 
has
 
appealed
 
the
 
amount
 
of
 
the
 
fine.
Also
 
in
 
2021,
 
the
 
European
Commission
 
issued
 
a
 
decision
 
finding
 
that
 
Credit
 
Suisse
 
and
 
four
 
other
 
banks
 
had
 
breached
 
European
 
Union
antitrust
 
rules
 
relating
 
to
 
supra-sovereign,
 
sovereign
 
and
 
agency
 
bonds
 
denominated
 
in
 
USD.
 
The
 
European
commission fined Credit Suisse EUR
11.9
m.
 
Credit Suisse has appealed the decision.
Putative class actions
 
have been filed
 
since 2015 in
 
US federal courts
 
against UBS, Credit
 
Suisse and other
 
banks
on behalf of persons who participated in
 
markets for US Treasury securities since 2007. A
 
consolidated complaint
was filed in
 
2017 SDNY alleging that
 
the banks colluded
 
with respect to,
 
and manipulated prices of,
 
US Treasury
securities sold at auction and in the secondary market and asserting claims under the antitrust
 
laws and for unjust
enrichment. In February 2024,
 
the Second Circuit affirmed
 
the district court’s dismissal
 
of the case.
 
The matter is
now
 
fully
 
resolved.
 
Similar
 
class
 
actions
 
have
 
been
 
filed
 
concerning
 
European
 
government
 
bonds
 
and
 
other
government bonds.
Credit Suisse, together with other financial institutions, was named in two Canadian putative class actions, which
allege that
 
defendants conspired to
 
fix the
 
prices of
 
supranational, sub-sovereign and
 
agency bonds sold
 
to and
purchased
 
from
 
investors
 
in
 
the
 
secondary market.
 
One
 
action
 
was
 
dismissed
 
against
 
Credit
 
Suisse
 
in
 
February
2020.
 
In
 
October
 
2022,
 
Credit
 
Suisse
 
entered
 
into
 
an
 
agreement
 
to
 
settle
 
all
 
claims
 
in
 
the
 
second
 
action.
 
The
settlement remains subject to court approval.
Credit default
 
swap auction
 
litigation –
In June
 
2021, Credit
 
Suisse, along
 
with other
 
banks and
 
entities, was
 
named
in a
 
putative class
 
action complaint
 
filed in
 
the US
 
District Court
 
for the
 
District of
 
New Mexico
 
alleging manipulation
of credit default swap (CDS) final auction prices. Defendants filed a motion to enforce a previous CDS class action
settlement in the SDNY. In January 2024,
 
the SDNY ruled that, to the extent
 
claims in the New Mexico action arise
from conduct prior to 30 June 2014,
 
those claims are barred by the SDNY
 
settlement. The plaintiffs have appealed
the SDNY decision.
With respect
 
to additional
 
matters and
 
jurisdictions not
 
encompassed by
 
the settlements
 
and orders
 
referred to
above, our balance sheet at 30 June 2024
 
reflected a provision in an amount that UBS
 
believes to be appropriate
under the
 
applicable accounting
 
standard. As
 
in the
 
case of
 
other matters
 
for which
 
we have
 
established provisions,
the future outflow of resources in respect of such matters
 
cannot be determined with certainty based on currently
available information
 
and accordingly
 
may ultimately
 
prove to
 
be substantially
 
greater (or
 
may be
 
less) than
 
the
provision that we have recognized.
4. Swiss retrocessions
 
The Federal Supreme Court of Switzerland ruled in 2012, in
 
a test case against UBS, that distribution fees paid
 
to
a firm for distributing third-party
 
and intra-group investment funds
 
and structured products must be disclosed
 
and
surrendered
 
to
 
clients
 
who
 
have
 
entered
 
into
 
a
 
discretionary
 
mandate agreement
 
with
 
the
 
firm,
 
absent a
 
valid
waiver. FINMA issued a
 
supervisory note
 
to all Swiss
 
banks in response
 
to the Supreme
 
Court decision.
 
UBS has
 
met
the FINMA requirements and has notified all potentially
 
affected clients.
The Supreme Court
 
decision has resulted,
 
and continues to
 
result, in a
 
number of client
 
requests to disclose
 
and
potentially surrender retrocessions. Client requests are assessed on a case-by-case
 
basis. Considerations taken into
account when
 
assessing these
 
cases include,
 
among other
 
things, the
 
existence of
 
a discretionary
 
mandate and
whether or not the client documentation contained
 
a valid waiver with respect to distribution
 
fees.
Our
 
balance sheet
 
at 30
 
June
 
2024 reflected
 
a
 
provision with
 
respect to
 
matters described
 
in
 
this
 
item 4
 
in
 
an
amount that UBS believes to be appropriate under the applicable accounting standard. The ultimate exposure will
depend on client
 
requests and the resolution
 
thereof, factors that are
 
difficult to predict
 
and assess. Hence, as
 
in
the case of
 
other matters for which
 
we have established provisions,
 
the future outflow
 
of resources in
 
respect of
such matters
 
cannot be
 
determined with certainty
 
based on
 
currently available information
 
and accordingly may
ultimately prove to be substantially greater (or
 
may be less) than the provision that we
 
have recognized.
5. Mortgage-related matters
Government and
 
regulatory
 
related matters
:
DOJ RMBS
 
settlement
 
– In January
 
2017, Credit Suisse
 
Securities (USA)
LLC
 
(CSS
 
LLC)
 
and
 
its
 
current
 
and
 
former
 
US
 
subsidiaries
 
and
 
US
 
affiliates
 
reached
 
a
 
settlement
 
with
 
the
 
US
Department of
 
Justice (DOJ)
 
related to
 
its legacy
 
Residential
 
Mortgage-Backed
 
Securities (RMBS)
 
business, a
 
business
conducted through
 
2007. The
 
settlement resolved
 
potential civil
 
claims by
 
the DOJ
 
related to certain
 
of those
 
Credit
Suisse entities’
 
packaging, marketing,
 
structuring, arrangement,
 
underwriting, issuance
 
and sale
 
of RMBS.
 
Pursuant
to the terms of the
 
settlement a civil monetary penalty was paid
 
to the DOJ in
 
January 2017. The settlement also
required
 
the
 
Credit
 
Suisse
 
entities
 
to
 
provide
 
certain
 
levels
 
of
 
consumer
 
relief
 
measures,
 
including
 
affordable
housing
 
payments
 
and
 
loan
 
forgiveness,
 
and
 
the
 
DOJ
 
and
 
Credit
 
Suisse
 
agreed
 
to
 
the
 
appointment
 
of
 
an
independent
 
monitor
 
to
 
oversee
 
the
 
completion
 
of
 
the
 
consumer
 
relief
 
requirements
 
of
 
the
 
settlement.
 
UBS
continues
 
to
 
evaluate
 
its
 
approach
 
toward
 
satisfying
 
the
 
remaining
 
consumer
 
relief
 
obligations.
 
The
 
aggregate
amount of the consumer relief obligation increased after 2021 by
5
% per annum of the outstanding amount due
until these obligations are settled. The monitor
 
publishes reports periodically on these consumer relief matters.
Civil litigation:
 
Repurchase litigations
 
– Credit
 
Suisse affiliates
 
are defendants
 
in various
 
civil litigation
 
matters related
to their roles as issuer, sponsor, depositor, underwriter and/or servicer of RMBS transactions. These cases currently
include
 
repurchase
 
actions
 
by
 
RMBS
 
trusts
 
and/or
 
trustees,
 
in
 
which
 
plaintiffs
 
generally
 
allege
 
breached
representations and
 
warranties
 
in
 
respect of
 
mortgage loans
 
and
 
failure
 
to
 
repurchase such
 
mortgage loans
 
as
required
 
under
 
the
 
applicable
 
agreements. The
 
amounts disclosed
 
below
 
do
 
not
 
reflect
 
actual
 
realized
 
plaintiff
losses to
 
date. Unless
 
otherwise stated,
 
these amounts
 
reflect
 
the original
 
unpaid principal
 
balance amounts
 
as
alleged in these actions.
DLJ Mortgage Capital, Inc. (DLJ) is a defendant in New
 
York state court in five actions: An action brought by Asset
Backed
 
Securities
 
Corporation
 
Home
 
Equity
 
Loan
 
Trust,
 
Series
 
2006-HE7
 
alleges
 
damages
 
of
 
not
 
less
 
than
USD
374
m.
 
In
 
December 2023,
 
the
 
court granted
 
in
 
part
 
DLJ’s
 
motion
 
to
 
dismiss, dismissing
 
with
 
prejudice all
notice-based
 
claims;
 
the
 
parties
 
have
 
appealed.
 
An
 
action
 
by
 
Home
 
Equity
 
Asset
 
Trust,
 
Series
 
2006-8,
 
alleges
damages of not
 
less than
 
USD
436
m. An
 
action by Home
 
Equity Asset Trust
 
2007-1 alleges damages
 
of not
 
less
than USD
420
m. A
 
non-jury trial
 
in this
 
action was
 
held between
 
January and
 
February 2023,
 
and a
 
decision is
pending. An action by Home Equity Asset Trust 2007-2 alleges damages of not less than USD
495
m. An action by
CSMC Asset-Backed Trust 2007-NC1 does not
 
allege a damages amount.
6. ATA litigation
Since November 2014, a
 
series of lawsuits have
 
been filed against a
 
number of banks, including
 
Credit Suisse, in
the US District Court
 
for the Eastern District of
 
New York
 
(EDNY) and the SDNY
 
alleging claims under the
 
United
States Anti-Terrorism
 
Act (ATA)
 
and the Justice
 
Against Sponsors of Terrorism
 
Act. The plaintiffs
 
in each of
 
these
lawsuits are, or are relatives of, victims of various terrorist
 
attacks in Iraq and allege a conspiracy
 
and/or aiding and
abetting based on allegations that various
 
international financial institutions, including the defendants, agreed to
alter,
 
falsify or omit
 
information from payment
 
messages that involved
 
Iranian parties for
 
the express
 
purpose of
concealing the
 
Iranian parties’ financial
 
activities and transactions
 
from detection
 
by US
 
authorities. The lawsuits
allege that
 
this conduct
 
has made
 
it possible
 
for Iran
 
to transfer
 
funds to
 
Hezbollah and
 
other terrorist
 
organizations
actively engaged
 
in harming
 
US military
 
personnel and
 
civilians. In
 
January 2023,
 
the United
 
States Court
 
of Appeals
for the Second Circuit affirmed a September 2019 ruling by the EDNY granting defendants’ motion to dismiss the
first
 
filed
 
lawsuit.
 
In
 
October
 
2023,
 
the
 
United
 
States
 
Supreme
 
Court
 
denied
 
plaintiffs’
 
petition
 
for
 
a
 
writ
 
of
certiorari.
 
In February 2024, plaintiffs filed a
 
motion to vacate the judgment in the
 
first filed lawsuit. Of the other
seven cases, four
 
are stayed, including
 
one that was
 
dismissed as to
 
Credit Suisse and
 
most of the
 
bank defendants
prior to entry of the stay, and in three plaintiffs have filed amended complaints.
7. Customer account matters
Several
 
clients
 
have
 
claimed
 
that
 
a
 
former
 
relationship
 
manager
 
in
 
Switzerland
 
had
 
exceeded
 
his
 
investment
authority
 
in
 
the
 
management of
 
their
 
portfolios, resulting
 
in
 
excessive concentrations
 
of
 
certain
 
exposures
 
and
investment losses. Credit
 
Suisse AG has
 
investigated the claims,
 
as well as
 
transactions among the
 
clients. Credit
Suisse AG filed a criminal complaint against the former relationship manager with the Geneva Prosecutor’s Office
upon which the
 
prosecutor initiated
 
a criminal investigation.
 
Several clients of
 
the former relationship
 
manager also
filed criminal complaints with the
 
Geneva Prosecutor’s Office. In
 
February 2018, the former relationship manager
was sentenced to five years
 
in prison by the Geneva criminal
 
court for fraud, forgery
 
and criminal mismanagement
and ordered
 
to pay
 
damages of approximately
 
USD
130
m. On
 
appeal, the Criminal
 
Court of Appeals
 
of Geneva
and, subsequently, the Swiss Federal Supreme Court upheld the main findings of the
 
Geneva criminal court.
Civil lawsuits have been initiated against
 
Credit Suisse AG and/or certain
 
affiliates in various jurisdictions, based
 
on
the findings established in the criminal proceedings
 
against the former relationship manager.
In Singapore,
 
in a
 
civil lawsuit
 
against Credit
 
Suisse Trust
 
Limited, the
 
Singapore International Commercial
 
Court
issued a judgment
 
finding for
 
the plaintiffs and,
 
in September 2023,
 
the court awarded
 
damages of USD
742.73
m,
excluding post-judgment
 
interest. This
 
figure does
 
not exclude
 
potential overlap
 
with the
 
Bermuda proceedings
against Credit Suisse Life (Bermuda)
 
Ltd., described below, and the
 
court ordered the parties to
 
ensure that there
shall be no double
 
recovery in relation to
 
this award and the
 
Bermuda proceedings.
 
On appeal from this
 
judgment,
in
 
July
 
2024,
 
the court
 
ordered some
 
changes to
 
the calculation
 
of
 
damages and
 
directed the
 
parties to
 
agree
adjustments to the
 
award. The court
 
has granted a
 
stay of execution
 
judgment pending appeal on
 
the condition
that damages awarded and post-judgment
 
interest accrued are paid into court
 
deposit.
In Bermuda, in the civil
 
lawsuit brought against Credit Suisse Life
 
(Bermuda) Ltd., the Supreme Court of Bermuda
issued a
 
judgment finding for
 
the plaintiff
 
and awarded
 
damages of
 
USD
607.35
m to
 
the plaintiff.
 
Credit Suisse
Life (Bermuda) Ltd.
 
appealed the decision
 
and in June
 
2023, the Bermuda
 
Court of Appeal
 
confirmed the award
issued by the
 
Supreme Court of Bermuda
 
and the finding that
 
Credit Suisse Life (Bermuda)
 
Ltd. had breached
 
its
contractual
 
and
 
fiduciary
 
duties,
 
but
 
overturning
 
the
 
finding
 
that
 
Credit
 
Suisse
 
Life
 
(Bermuda)
 
Ltd.
 
had
 
made
fraudulent misrepresentations. In
 
March 2024,
 
the Bermuda
 
Court of
 
Appeal granted
 
a motion
 
by Credit
 
Suisse
Life (Bermuda) Ltd for leave to appeal the judgment to the Judicial Committee of the Privy Council and the notice
of such appeal was filed.
 
The Court of Appeal also ordered
 
that the current stay continue pending determination
of the
 
appeal on
 
the condition
 
that the
 
damages awarded
 
remain within
 
the escrow
 
account plus
 
interest calculated
at the Bermuda statutory rate of
3.5
%. In December 2023, USD
75
m was released from the escrow
 
account and
paid to plaintiffs.
 
In Switzerland, civil
 
lawsuits have commenced
 
against Credit Suisse
 
AG in
 
the Court of
 
First Instance
 
of Geneva,
with statements of claim served in March 2023
 
and March 2024.
8. Mozambique matter
Credit
 
Suisse
 
was
 
subject to
 
investigations by
 
regulatory
 
and
 
enforcement
 
authorities, as
 
well as
 
civil
 
litigation,
regarding certain Credit
 
Suisse entities’
 
arrangement of
 
loan financing
 
to Mozambique
 
state enterprises,
 
Proindicus
S.A. and Empresa Moçambicana de Atum
 
S.A. (EMATUM), a
 
distribution to private investors of loan
 
participation
notes (LPN) related
 
to the EMATUM
 
financing in September
 
2013, and certain
 
Credit Suisse
 
entities’ subsequent
role in arranging the exchange
 
of those LPNs for
 
Eurobonds issued by the Republic
 
of Mozambique. In 2019,
 
three
former Credit Suisse employees pleaded guilty in the EDNY to accepting improper personal benefits in connection
with financing transactions carried out with
 
two Mozambique state enterprises.
In
 
October 2021,
 
Credit
 
Suisse reached
 
settlements with
 
the DOJ,
 
the US
 
Securities and
 
Exchange Commission
(SEC), the
 
UK Financial
 
Conduct Authority
 
(FCA) and
 
FINMA to
 
resolve inquiries
 
by these
 
agencies, including
 
findings
that Credit
 
Suisse failed
 
to appropriately
 
organize and
 
conduct its
 
business with
 
due skill
 
and care,
 
and manage
risks. Credit
 
Suisse Group
 
AG entered
 
into a
 
three-year Deferred
 
Prosecution Agreement
 
(DPA) with
 
the DOJ
 
in
connection with the criminal information
 
charging Credit Suisse Group AG
 
with conspiracy to commit wire
 
fraud
and CSSEL entered into a Plea Agreement and pleaded guilty to one count
 
of conspiracy to violate the US federal
wire
 
fraud statute
 
Under
 
the terms
 
of
 
the DPA,
 
UBS
 
Group
 
AG (as
 
successor to
 
Credit
 
Suisse
 
Group AG)
 
must
continue compliance
 
enhancement and
 
remediation efforts
 
agreed by
 
Credit Suisse,
 
report to
 
the DOJ
 
on those
efforts
 
for
 
three
 
years
 
and
 
undertake
 
additional
 
measures
 
as
 
outlined
 
in
 
the
 
DPA.
 
If
 
the
 
DPA’s
 
conditions
 
are
complied with,
 
the charges
 
will be dismissed
 
at the
 
end of the
 
DPA’s three-year
 
term. In addition,
 
the FINMA
 
decree
concluding its enforcement proceeding, ordered
 
the bank to remediate certain deficiencies.
Beginning in 2019, Credit Suisse
 
entities, former employees and several other
 
unrelated entities were sued in
 
the
English High Court
 
by the Republic
 
of Mozambique seeking
 
a declaration that
 
the sovereign guarantee
 
issued in
connection with the
 
ProIndicus loan syndication was
 
void, and damages.
 
Credit Suisse entities
 
subsequently filed
cross claims against several entities related to the project
 
contractor and several Mozambique officials. In addition,
several of the banks that participated in the ProIndicus loan syndicate brought claims against
 
Credit Suisse entities
seeking compensation for any
 
losses suffered as a
 
result of any
 
invalidity of the
 
sovereign guarantee or damages
stemming from
 
the alleged
 
loss. In
 
addition, the
 
project contractor,
 
its owner
 
and one
 
of its
 
executives brought
defamation claims
 
against Credit
 
Suisse in
 
Lebanon. In
 
2023, Credit Suisse
 
entered into
 
settlement agreements
 
that
resolved all claims involving Credit Suisse
 
entities in the English High Court.
9. ETN-related litigation
XIV litigation:
Since March 2018, three class action complaints
 
were filed in the SDNY on behalf
 
of a putative class
of purchasers
 
of VelocityShares
 
Daily Inverse
 
VIX Short
 
Term
 
Exchange Traded
 
Notes linked
 
to the
 
S&P 500
 
VIX
Short-Term
 
Futures
 
Index
 
(XIV
 
ETNs).
 
The
 
complaints have
 
been
 
consolidated and
 
asserts
 
claims
 
against
 
Credit
Suisse for
 
violations of
 
various anti-fraud
 
and anti-manipulation
 
provision of
 
US securities
 
laws arising
 
from a
 
decline
in the value of XIV ETNs in February 2018. On appeal from an order of the SDNY dismissing all claims, the Second
Circuit issued an
 
order reinstated a
 
portion of the claims.
 
In decisions in
 
March 2023 and
 
March 2024, the court
denied class certification for two of
 
the three classes proposed by plaintiffs and certified the third proposed class.
10. Bulgarian former clients matter
Credit
 
Suisse AG
 
had
 
been responding
 
to an
 
investigation by
 
the Swiss
 
Office
 
of the
 
Attorney General
 
(SOAG)
concerning the
 
diligence and
 
controls
 
applied
 
to a
 
historical relationship
 
with Bulgarian
 
former clients
 
who are
alleged to
 
have laundered
 
funds through
 
Credit Suisse
 
AG accounts.
 
In December
 
2020, the
 
SOAG brought
 
charges
against Credit Suisse AG
 
and other parties. In June
 
2022, following a trial, Credit
 
Suisse AG was convicted in
 
the
Swiss
 
Federal
 
Criminal
 
Court
 
of
 
certain
 
historical
 
organizational
 
inadequacies
 
in
 
its
 
anti-money
 
laundering
framework and ordered to pay
 
a fine of CHF
2
m. In addition, the court seized
 
certain client assets in the
 
amount
of
 
approximately
 
CHF
12
m
 
and
 
ordered
 
Credit
 
Suisse
 
AG
 
to
 
pay
 
a
 
compensatory
 
claim
 
in
 
the
 
amount
 
of
approximately CHF
19
m. In
 
July 2022,
 
Credit Suisse
 
AG appealed
 
the decision
 
to the
 
Swiss Federal
 
Court of
 
Appeals.
11. Supply chain finance funds
Credit
 
Suisse
 
has
 
received
 
requests
 
for
 
documents and
 
information in
 
connection with
 
inquiries, investigations,
enforcement and other
 
actions relating to
 
the supply chain finance
 
funds (SCFFs) matter by
 
FINMA, the FCA and
other regulatory and governmental agencies. The Luxembourg
 
Commission de Surveillance du Secteur Financier is
reviewing the
 
matter and
 
has commissioned
 
a report
 
from a
 
third party.
 
Credit Suisse
 
is cooperating
 
with these
authorities.
In
 
February
 
2023,
 
FINMA
 
announced
 
the
 
conclusion
 
of
 
its
 
enforcement
 
proceedings
 
against
 
Credit
 
Suisse
 
in
connection with the
 
SCFFs matter. In
 
its order, FINMA reported
 
that Credit Suisse
 
had seriously breached
 
applicable
Swiss supervisory
 
laws in
 
this context
 
with regard
 
to risk
 
management and
 
appropriate operational
 
structures. While
FINMA
 
recognized
 
that
 
Credit
 
Suisse
 
had
 
already
 
taken
 
extensive
 
organizational
 
measures
 
to
 
strengthen
 
its
governance
 
and
 
control
 
processes,
 
FINMA
 
ordered
 
certain
 
additional
 
remedial
 
measures.
 
These
 
include
 
a
requirement that
 
Credit Suisse
 
documents the
 
responsibilities
 
of approximately
600
 
of its
 
highest-ranking managers.
This
 
measure
 
has
 
been
 
made
 
applicable
 
to
 
UBS
 
Group.
 
FINMA
 
has
 
also
 
separately
 
opened
 
four
 
enforcement
proceedings against former managers of Credit
 
Suisse.
In May 2023,
 
FINMA opened
 
an enforcement
 
proceeding against
 
Credit Suisse in
 
order to confirm
 
compliance with
supervisory requirements in response to inquiries
 
from FINMA’s enforcement division in the SCFFs
 
matter.
The Attorney
 
General of
 
the Canton
 
of Zurich
 
has initiated
 
a criminal
 
procedure in
 
connection with
 
the SCFFs
 
matter
and several fund investors have joined the procedure as interested parties. Certain former and active Credit Suisse
employees,
 
among
 
others,
 
have
 
been
 
named
 
as
 
accused
 
persons,
 
but
 
Credit
 
Suisse
 
itself
 
is
 
not
 
a
 
party
 
to
 
the
procedure.
Certain civil actions have
 
been filed by fund investors
 
and other parties against
 
Credit Suisse and/or certain
 
officers
and directors in various
 
jurisdictions, which make allegations including mis-selling
 
and breaches of duties
 
of care,
diligence and
 
other fiduciary
 
duties. In June
 
2024, the
 
Credit Suisse
 
SCFFs made
 
a
 
voluntary offer
 
to the
 
SCFFs
investors to
 
redeem all
 
outstanding fund
 
units. The
 
offer expired
 
on
 
31 July 2024,
 
and
 
fund
 
units representing
around
92
% of
 
the SCFFs’
 
net asset
 
value were
 
tendered in
 
the offer
 
and accepted.
 
Fund units
 
accepted in
 
the
offer were redeemed at
90
% of the net asset value determined on 25
 
February 2021, net of any payments made
by the relevant
 
fund to the
 
fund investors
 
since that
 
time. Investors
 
whose units
 
were redeemed
 
released any
 
claims
they may have had against the SCFFs, Credit Suisse
 
or UBS. The offer was funded by UBS through the purchase
 
of
units of feeder sub-funds.
12. Archegos
Credit
 
Suisse
 
and
 
UBS
 
have
 
received
 
requests
 
for
 
documents
 
and
 
information
 
in
 
connection
 
with
 
inquiries,
investigations
 
and/or
 
actions
 
relating
 
to
 
their
 
relationships
 
with
 
Archegos
 
Capital
 
Management
 
(Archegos),
including from FINMA
 
(assisted by a
 
third party
 
appointed by FINMA),
 
the DOJ, the
 
SEC, the US
 
Federal Reserve,
the
 
US
 
Commodity
 
Futures
 
Trading
 
Commission
 
(CFTC),
 
the
 
US
 
Senate
 
Banking
 
Committee,
 
the
 
Prudential
Regulation Authority (PRA),
 
the FCA, COMCO, the
 
Hong Kong Competition
 
Commission and other regulatory
 
and
governmental agencies.
 
UBS
 
is
 
cooperating
 
with
 
the
 
authorities
 
in
 
these
 
matters.
 
In
 
July
 
2023,
 
CSI
 
and
 
CSSEL
entered into a settlement agreement
 
with the PRA providing for
 
the resolution of the PRA’s
 
investigation. Also in
July 2023, FINMA
 
issued a decree
 
ordering remedial measures
 
and the Federal
 
Reserve Board issued
 
an Order
 
to
Cease and Desist. Under the terms of the order,
 
Credit Suisse paid a civil money penalty and agreed to undertake
certain remedial
 
measures relating
 
to counterparty
 
credit risk
 
management, liquidity
 
risk management
 
and non-
financial risk management, as well as enhancements to board oversight and governance. UBS Group, as
 
the legal
successor to Credit Suisse Group AG,
 
is a party to the FINMA
 
decree and Federal Reserve Board
 
Cease and Desist
Order.
 
Civil
 
actions
 
relating
 
to
 
Credit
 
Suisse’s
 
relationship
 
with
 
Archegos
 
have
 
been
 
filed
 
against
 
Credit
 
Suisse
and/or certain officers and directors, including claims for
 
breaches of fiduciary duties.
13. Credit Suisse financial disclosures
Credit Suisse
 
Group AG
 
and certain
 
directors, officers
 
and executives
 
have been
 
named in
 
securities class action
complaints pending
 
in the SDNY. These complaints,
 
filed on behalf
 
of purchasers of
 
Credit Suisse shares, additional
tier 1 capital notes, and other securities
 
in 2023, allege that defendants made
 
misleading statements regarding: (i)
customer
 
outflows
 
in
 
late
 
2022;
 
(ii)
 
the
 
adequacy
 
of
 
Credit
 
Suisse’s
 
financial
 
reporting
 
controls;
 
and
 
(iii)
 
the
adequacy of
 
Credit
 
Suisse’s risk
 
management processes,
 
and include
 
allegations relating
 
to Credit
 
Suisse Group
AG’s merger with UBS Group AG. Many of the actions have been consolidated, and a motion to dismiss has
 
been
filed and remains pending. One
 
additional action, filed
 
in October 2023, has been
 
stayed pending a determination
on whether it should be consolidated with the
 
earlier actions.
Credit Suisse has received requests for documents and information from regulatory and governmental agencies in
connection with inquiries,
 
investigations and/or actions
 
relating to
 
these matters, as
 
well as
 
for other statements
regarding Credit Suisse’s financial condition,
 
including from the SEC, the DOJ
 
and FINMA. UBS is cooperating with
the authorities in these matters.
14. Merger-related litigation
Certain Credit
 
Suisse Group AG
 
affiliates and certain
 
directors, officers
 
and executives have
 
been named in
 
class
action complaints pending in
 
the SDNY.
 
One complaint, brought
 
on behalf of
 
Credit Suisse shareholders,
 
alleges
breaches of fiduciary duty
 
under Swiss law and
 
civil RICO claims
 
under United States
 
federal law. In February 2024,
the court granted
 
defendants’ motions to
 
dismiss the civil
 
RICO claims and
 
conditionally dismissed the Swiss
 
law
claims pending defendants’ acceptance of jurisdiction in Switzerland. In March 2024, having received consents to
Swiss jurisdiction from all defendants served
 
with the complaint, the court dismissed the Swiss
 
law claims against
those defendants.
 
Additional complaints,
 
brought
 
on behalf
 
of holders
 
of Credit
 
Suisse additional
 
tier 1
 
capital
notes (AT1
 
noteholders) allege
 
breaches of
 
fiduciary duty
 
under Swiss
 
law,
 
arising from
 
a series
 
of scandals
 
and
misconduct, which
 
led to Credit
 
Suisse Group AG’s
 
merger with
 
UBS Group AG,
 
causing losses
 
to shareholders
 
and
AT1 noteholders. The motion to dismiss the first of these complaints
 
was granted in March 2024 on the basis that
Switzerland is the most appropriate forum for litigation.