Shareholder Alert: Southern District of New York Partially Grants Credit Suisse Defendants’ Motion to Dismiss, Certifies Class, and Consolidates Cases for Pre-Trial Matter
Case Name: In re Credit Suisse Securities Fraud Class Actions
Case Nos.: 23-cv-9277 (CM) and 23-cv-5874 (CM)
Jurisdiction: U.S. District Court, Southern District of New York
Judge Colleen McMahon
Summary
On July 7, 2025, Judge McMahon of U.S. District Court, Southern District of New York issued a decision in In re Credit Suisse Securities Fraud Class Actions. Judge McMahon took a number of actions on the case:
Denied defendant PWC’s motion to dismiss as moot;
Granted in part and denied in part defendant Credit Suisse’s motion to dismiss Core Capital Partners, Ltd.’s complaint
Granted plaintiff Ali Diabat’s motion to certify a class; and
Granted in part Credit Suisse’s motion to consolidate the Core Capital and Diabat actions for pre-trial matters.
The ruling allows certain Section 10(b) and 20(a) claims to proceed against Credit Suisse, Axel P. Lehmann, Ulrich Körner, and Dixit Joshi, while dismissing claims against Thomas Gottstein, David R. Mathers, and António Horta-Osório.
Underlying Lawsuit
The consolidated actions, Diabat v. Credit Suisse Gr. AG (23-cv-5874) and Core Capital v. Credit Suisse (23-cv-9277), allege violations of Sections 10(b) and 20(a) of the Securities Exchange Act and Rule 10b-5, stemming from Credit Suisse’s March 2023 collapse.
Plaintiff Ali Diabat represents a class of Credit Suisse securities purchasers (American Depository Shares, specific notes, and options). Plaintiff Core Capital, represents AT1 Bondholders. Plaintiffs say Defendants made false or misleading statements about the Credit Suisse’s financial health and Internal Control over Financial Reporting (ICFR). Those financial health problems and ICFR issues lead to losses after disclosures and a write-down of AT1 Bonds.
Defendants’ Motion to Dismiss
The Credit Suisse Defendants (Credit Suisse, Lehmann, Körner, Joshi) moved to dismiss Core Capital’s complaint under Rule 12(b)(6), arguing Plaintiffs’ complaint failed to allege sufficient facts in a number of required areas. Specifically, Defendants asserted plaintiffs failed to allege:
Falsity: Of 25 alleged misstatements, 16 weren’t legally actionable for various reasons. The remaining five statements were “puzzle pleading” (unclear claims requiring judicial guesswork).
Scienter: Core Capital failed to plead a strong inference of intent or recklessness.
Loss Causation: The March 14, 2023 Form 20-F and March 19, 2023 UBS merger announcement did not support loss causation due to the AT1 Bond write-down’s unique circumstances
PWC’s motion to dismiss was filed despite Core Capital’s voluntary dismissal.
Plaintiffs’ Opposition
Core Capital argued that five statements weren’t merely “puzzle pleading” and were pled with sufficient specificity. Scienter was supported by Credit Suisse’s SEC correspondence on ICFR. Loss causation was pled via the March 14, 2023 Form 20-F disclosure of ICFR issues and the March 19, 2023 AT1 Bond write-down, which Core Capital alleged resulted from the fraud (Compl. ¶ 37; Dkt. No. 130 at 14).
Court’s Ruling
The Court:
Denied PWC’s Motion: Moot due to Core Capital’s voluntary dismissal
Granted in Part and Denied in Part CS Defendants’ Motion: Dismissed claims against Gottstein, Mathers, and Horta-Osório. Allowed Section 10(b) and 20(a) claims to proceed against Credit Suisse, Lehmann, Körner, and Joshi for five statements.
Granted Diabat’s Class Certification: Certified a class excluding AT1 Bondholders
Granted in Part CS Defendants’ Consolidation Motion: Consolidated cases for pre-trial matters but maintained separate actions.
Court’s Rationale
Falsity
Five statements were sufficiently pled as false or misleading. The Court rejected the “puzzle pleading” argument for these statements.
Scienter
The bank’s SEC correspondence on ICFR issues was deemed sufficient for an inference of scienter. The court did call this inference “weak.”
Loss Causation
The Court found Core Capital plausibly pled loss causation via the March 14, 2023 Form 20-F disclosure of ICFR issues and the March 19, 2023 UBS merger announcement, which triggered the AT1 Bond write-down.
Final Disposition and Next Steps
Claims against PWC, Gottstein, Mathers, and Horta-Osório are dismissed without prejudice. Section 10(b) and 20(a) claims against Credit Suisse, Lehmann, Körner, and Joshi proceed for the five actionable statements. The Diabat class, excluding AT1 Bondholders, is certified. The cases are administratively consolidated for pre-trial matters, with Core Capital to move for class certification by September 19, 2025, and discovery to conclude by August 22, 2025. Defendants must respond to surviving claims within 30 days of any class certification.
