Credit Suisse Probe Escalates -- WSJ
September 03 2020 - 3:02AM
Dow Jones News
By Margot Patrick
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (September 3, 2020).
Switzerland's financial regulator said Wednesday it had started
enforcement proceedings against Credit Suisse Group AG over the
physical surveillance of two bank executives last year.
The Swiss Financial Market Supervisory Authority, known as
Finma, said it would pursue indicated violations of supervisory law
in relation to Credit Suisse's surveillance and security
activities, "and in particular the question of how these activities
were documented and controlled."
The action escalates a probe by Finma that was announced in late
December. At the time it said it would focus on corporate
governance and compliance issues raised by the activities. It
appointed an outside lawyer to investigate the surveillance earlier
this year.
In February, Chief Executive Tidjane Thiam resigned, having
failed to contain the reputational fallout from the spying.
Credit Suisse on Wednesday said it "will continue to fully
cooperate with Finma and is determined to support the effort to
ensure a complete and expeditious conclusion of the review of this
episode and incorporate lessons learned."
Credit Suisse regularly surveils its employees under compliance
programs, such as by monitoring work phone calls and emails. It has
said it draws a line, though, at physical surveillance of employees
outside of work.
The spying scandal began in September 2019 when the bank's
former international wealth management head, Iqbal Khan, spotted
and confronted an investigator following him in Zurich. Mr. Khan
was due to start at rival UBS Group AG the next month. An outside
law firm hired by the Credit Suisse board found that the
surveillance had been ordered by the bank's chief operating officer
to protect the bank's interests. The COO resigned and hasn't
commented.
The law firm said some messages between individuals involved had
been deleted.
Then, in December, a Swiss newspaper published details and
photos of the surveillance of a second executive. The law firm
again found the COO had ordered it. In both instances, the law firm
said there was no evidence Mr. Thiam knew about the activities.
In its public report on Mr. Khan's surveillance, the law firm
said its ability to investigate was constrained in part because
some messages it sought to review had been deleted. In December,
Credit Suisse said the surveillance of the second executive, which
took place in February 2019, had been masked by the responsible
individuals so there was no identifiable trace in the bank's
systems of the activities.
That incident triggered Finma's investigation and led to the
board losing confidence in Mr. Thiam's leadership to stem the
crisis. He was replaced in February by Thomas Gottstein.
Finma can censure firms it supervises, ban executives from the
industry and take other actions to make sure firms comply with
rules. It doesn't have criminal enforcement powers but can refer
cases to prosecutors.
Write to Margot Patrick at margot.patrick@wsj.com
(END) Dow Jones Newswires
September 03, 2020 02:47 ET (06:47 GMT)
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