Swiss banking group Credit Suisse has reportedly won a bid to temporarily hold back the release of Finma’s fraud report about the bank’s ex-star banker Patrice Lescaudron.
The suspension order on the release of the report of more than 270 pages was ordered by a Geneva appeals court, reported Bloomberg.
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Background
Lescaudron, who joined Credit Suisse in 2004, admitted to falsifying trades and using false statements to cover up the losses.
His fraud was undetected for over seven years until a massive wrong bet on a single US drug stock in 2015 exposed the misconduct.
He was arrested in 2015 for fraud, with some of his clients losing tens of millions of Swiss francs.
He was convicted in 2018 and committed suicide in July.
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By GlobalDataSome of his clients have been asking for access to the fraud report and saying that Credit Suisse should bear some responsibility for the incident.
Geneva prosecutor Yves Bertossa is currently investigating whether Credit Suisse failed to prevent Lescaudron from committing the fraud.
The latest order gives judges time to decide whether Bertossa can share the fraud report with the Russian and Georgian customers of Lescaudron.
In 2018, Finma had scolded Credit Suisse for failing to oversee the shortcomings of the rogue banker and instead rewarding him.
The Swiss financial regulator said: “Instead of disciplining the client manager promptly and proportionately, the bank rewarded him with high payments and positive employee assessments.”
The bank could be fined CHF5m ($5.4m) if proven guilty, and would allow customers to seek compensation for their losses.
The bank has consistently denied any misconduct in the matter. Lescaudron’s former boss testified at his trial of being unaware of the fraud.
The bank noted that it “can only reiterate that Finma’s investigation did not reveal any facts that support the criminal complaints against Credit Suisse.”
However, Credit Suisse earlier lost a separate appeal at the Swiss Supreme Court for preventing prosecutors from accessing the report.
Spying scandal
The bank has recently also been involved in a spying scandal, which involved the surveillance of its former wealth management head Iqbal Khan.
This occurred in the wake of Khan’s defection to rival UBS.
Recently, Finma launched enforcement proceedings against Credit Suisse for the scandal.
The scandal may involve more employees than previously alleged, Bloomberg recently reported citing newspaper Sonntagszeitung.
