With losses driving stock prices to all-time lows, Credit Suisse Group investors may yet be in for a rough ride, especially for customers who purchased or were recommended structured products, whose features such as leverage might exacerbate losses and plunge retail investors into further despair. In response to what Credit Suisse Ulrich Korner described as "uncertainty and speculation both outside and within the company," the bank announced an emergency strategy review to devise "transformation plans" for the firm.
Credit Suisse reached its all-time low in early October 2022 before volatility brought the Swiss bank's stock price back to a more respectable, but still losing, position: one analyst wrote that Credit Suisse's shares have fallen more than 95% from their peak. A cursory look at Credit Suisse Group AG (NYSE:CS) indicates that Credit Suisse's trajectory has trended downward since its recovery from 2008's industry-wide financial crisis.
Opportunistically, some celebrity analysts including Jim Cramer are advising that now might be a good time to buy into Credit Suisse—perhaps your own broker has even suggested Credit Suisse—all while articles with headlines such as "Credit Suisse's Options Worsen as Markets Mayhem Takes Toll" continue to crop up and share prices continue to drop down, putting investors at greater risk.
The Credit Suisse turmoil has even led to the resignation of key personnel, such as Credit Suisse's deputy head of Asia wealth management Young Jin Yee and Luke Chiu, the managing director and Credit Suisse's China market leader in Hong Kong.
TheStreet penned an article entitled, "Credit Suisse Is in Deep Trouble," noting that credit default swaps—which are essentially financial products that effectively serve as somewhat of an insurance against default by hedging risk and speculation—are rising sharply, raising further concerns that Credit Suisse could fall into even further financial peril. Reuters reported that UBS five-year credit default swaps rose to its highest level in a decade in correlation with Credit Suisse's fiscal woes.
The Credit Suisse X-Links Silver Shares Covered Call ETN (NASDAQ:SLVO) has lost 28% of its value over the past three years.
Even Credit Suisse's X-Links Crude Oil Shares Covered Call ETN (NASDAQ:USOI) which may initially appear to have gained value over the summer is down 15% since the start of 2022 and has lost 81% of its value over the past five years.
Covered calls can limit investors' potential profits and may not offer much protection in the event of a price drop, especially for investors seeking to hold products for longer periods of time.
In turn, although Credit Suisse may still be popular with certain investment managers—all while the company's financial health continues to degrade—the risks posed by investing in a product experiencing high uncertainty or volatility remain, especially when compounded with complex and structured products, which may suffer greater losses if things go further arye.
If you invested with a broker or financial adviser who recommended purchasing Credit Suisse structured products or similar securities and investment options not in accordance with your investment objectives or risk tolerance preferences, and such unsuitable recommendations have proven harmful to your interests or resulted in financial damages, please call an experienced FINRA arbitration attorney at The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.