Well, it finally happened. Yesterday (Wednesday, 3/14), Credit Suisse Group AG was sued by a prominent Wall Street-based law firm, Levi & Korsinsky as many had been affected last month after betting against stock-market tumult through their XIV investments. Now, the firm, on behalf of investors, will be trying to recover on very steep losses after the XIV collapse. Rajan Chahal was the investor who filed the XIV Class Action Lawsuit, going against the bank, Chief Executive Officer Tidjane Thiam, and finance chief David Mathers. The XIV Class Action complaint alleges that Credit Suisse failed to disclose that the company was manipulating its VelocityShares Daily Inverse VIX Short-Term exchange-traded notes (known by the trading symbol XIV). The XIV Lawsuit complaint seeks action status on behalf of other buyers as well. Here’s what we know, so far, about the XIV lawsuit, and the XIV collapse.
Per Bloomberg, U.S. regulators already are scrutinizing the implosion last month of a variety of VIX exchange-traded products that were designed to profit in calm markets. The blowup — which centered around a spike in volatility on Feb. 5 — has put a spotlight on a small corner of the more than $3 trillion exchange-traded fund industry that lets everyone from hedge funds to mom-and-pop investors engage in complex trading strategies.
“Credit Suisse was actively manipulating the Inverse VIX Short ETNs by liquidating its holdings in various financial products to avoid a loss,” Chahal’s attorneys wrote in the complaint. The filing mainly draws on information that’s already public, while noting Chahal aims to turn up more evidence to bolster the case during the proceeding.
Credit Suisse disputed the assertions in a statement.
“The publicly available prospectus accurately and fully disclosed the risks of an investment in XIV, which is only intended for sophisticated institutional clients,” the Zurich-based bank said. “Credit Suisse did not engage in any conduct designed to mislead investors regarding XIV’s value or cause the February 5, 2018, decline in XIV’s price.”
The fund’s market value topped $2 billion in late January before losing most of its value in early February. Credit Suisse soon announced it would buy back shares in the product because there was no prospect of price recovery.
Attached is a full copy of the complaint:
Editor’s note on the XIV Class Action Lawsuit:
This piece is written about the very recent XIV Lawsuit. If you are considered eligible to be among the class of consumers described in the class action, you may eventually be able to participate in receiving any compensation the court may award.
If you believe that what is alleged in the XIV Class Action complaint has affected you, please don’t hesitate to reach out to us. We’d be happy to help you take a step in the right direction, fight this issue, and better enable you to join the XIV class action. If interested, please send an email to Outreach@ConsiderTheConsumer.com, find us on Twitter or Facebook, or even connect with us directly on our website! We look forward to hearing from you all.