A collective of past executives and directors from Credit Suisse Group, spearheaded by former chairman Urs Rohner, has reached an agreement to pay $115m to resolve a shareholder lawsuit.

The suit accused them of inadequate risk management practices that led to financial losses during the years 2020 and 2021.

The preliminary approval for the settlement was granted by a judge in New York.

The funds will be directed to UBS Group, which has taken over Credit Suisse, and will be sourced from the insurers of the involved directors and officers, as outlined in court documents, reported Bloomberg.

A spokesperson for UBS commented, “We are pleased that this long-running litigation has been resolved by settlement.”

The lawsuit, led by the Employees Retirement System for the City of Providence, alleged that failures in risk management contributed to losses incurred when several counterparties defaulted.

The counterparties include Malachite Capital Management, Greensill Capital Management, and Archegos Capital Management.

Since acquiring Credit Suisse in a government-backed rescue in 2023, UBS has been addressing various legal matters linked to its predecessor.

Credit Suisse was nearing collapse at that time, having suffered a series of damaging events, including a loss exceeding $5bn due to its involvement with Archegos, which collapsed in March 2021.

Rohner stepped down from his role as chairman of Credit Suisse in April 2021, two years prior to the bank’s eventual failure.

The lawsuit filed by the Providence pension fund was classified as a “derivative claim,” representing shareholders on behalf of Credit Suisse.

Consequently, the settlement amount, along with any accrued interest, will be transferred from the insurers of the defendants to UBS, after deducting legal fees owed to the attorneys representing the investors.

The specific fees have yet to be finalised but will be presented to the court later in the proceedings.

Attorneys for the shareholders informed the court that the settlement comes after three years of “fiercely-contested litigation” across New York, Zurich, and Valais, Switzerland, culminating from mediation efforts that commenced in May 2023.