Earlier this week, the Swiss regulator ordered 16 billion Swiss francs ($17.5 billion) of Additional Tier-1 (AT1) debt to be wiped out under its rescue takeover by UBS.

The issue came up for discussion in a meeting earlier this week when some members wanted to sue the banks for the write-off, but the association decided not to take any action, the person added. The source was not authorized to speak about the matter publicly.

The source said it was always "black and white" that these bonds can be written down to zero in adverse events. "So if you bought it and didn't know about it, shame on you and if you bought it and knew about it, well..., " the source added.

The Credit Roundtable was not available for an immediate comment. Launched in 2007 for bondholders protection, Credit Roundtable consists of 43 members including PIMCO, Vanguard, MetLife, Canadian pension fund Omers, Sun Life Financial Inc among others.

It was unclear if the individual members could pursue legal challenge.

The bond holders of Credit Suisse in Europe and UK have been seeking legal advice over the Swiss banking regulator's decision to write off AT1 bonds under the rescue take over by UBS. However on Thursday, the Swiss regulator once again re affirmed its position on creditor hierarchy.

(Reporting by Divya Rajagopal; Editing by Denny Thomas)

By Divya Rajagopal