For years, he was a member of the elite of Swiss bankers. Now, the former Credit Suisse wealth manager is in a prison hospital in Geneva, charged with fraud, misappropriation, and criminal mismanagement, facing as many as 10 years behind bars.
The case reaches beyond the executive, who under Swiss law can’t be identified in public. Credit Suisse now faces criminal accusations from three clients, alleging it played a role in the fraud.
The timing is terrible for Switzerland’s No. 2 bank. Its new CEO, Tidjane Thiam, is betting its future on managing money for the rich. Wednesday, he announced plans for more cuts at its investment bank. He also told Bloomberg Television he was blindsided by risky debt and illiquid positions taken at the trading unit that he expects to contribute to a loss for the bank in the first quarter.
At least one client involved in the Geneva case -- one of Credit Suisse’s largest -- is pulling his accounts from the bank. In criminal complaints with prosecutors, his lawyers accuse the bank of money laundering and “churning” his accounts to boost its revenue with unnecessary trades. Wealthy men from the former Soviet Union, the clients said their losses reach into the hundreds of millions of dollars.
“The catastrophic situation in the accounts wasn’t caused by an unfortunate investment policy but by a chain of trades, the vast majority of them unauthorized, that created excessive concentrations of risks for clients in order to simultaneously procure important revenues for the bank,” lawyers for one said in a complaint filed with prosecutors in January.
Complex History
Credit Suisse spokeswoman Anna Sexton said in an e-mail that the now-fired banker “violated internal rules and Swiss law and engaged in criminal acts to deceive the bank’s control system.” She added that the bank believes he “concealed his deceptions from colleagues and that this is to the best of its knowledge an individual case.” She declined to comment further.
In December, the bank filed its own criminal complaint against the banker, in which it said it was still trying to untangle the complex history of his transactions.
Credit Suisse is amending its internal policies in the wake of the revelations, increasing supervision of the highest-earning client advisers, requiring independent confirmation of large transfers and making other changes to ensure such abuses don’t happen again, according to a person familiar with the moves.
The banker’s motivations for the years of deception, which he admitted in statements to the bank, remain unclear. Credit Suisse said it hasn’t found evidence he benefited, but “it can’t be excluded that he could have sought personal gain” from the trades, according to the criminal complaint the bank filed against him. The banker said in a statement to Credit Suisse in September that although the unauthorized trading went on for at least six years, he didn’t gain financially from it. His lawyer, Simon Ntah, said his client is cooperating with authorities.