Credit Suisse Pleads Guilty, Pays $2.6 b

The Economic Times - - World View -

Credit Suisse has done what no other bank of its size and sig­nif­i­cance has done in over two decades: plead guilty to crim­i­nal wrong­do­ing. In a sign that bank­ing gi­ants are no longer im­mune from crim­i­nal charges, de­spite con­cerns that fi­nan­cial in­sti­tu­tions have grown so large and in­ter­con­nected that they are too big to jail, US federal prose­cu­tors de­manded that Credit Suisse’s par­ent com­pany plead guilty to help­ing thou­sands of Amer­i­can ac­count hold­ers hide their wealth. As part of a deal, the Swiss bank met the de­mands, agree­ing to one count of con­spir­ing to aid tax eva­sion in a scheme that “spanned decades.” Credit Suisse, which has a gi­ant in­vest­ment bank in New York and whose CEO, Brady W Dougan, is an Amer­i­can, will also pay $2.6 bil­lion in penal­ties and hire an in­de­pen­dent mon­i­tor for up to two years. The re­buke from federal prose­cu­tors as well as from the Federal Re­serve and New York’s state bank­ing reg­u­la­tor, Ben­jamin M Lawsky, is in­tended as a blow against over­seas tax dodg­ing and the shad­owy world of Swiss bank se­crecy. The deal also sig­nals a shift in prose­cu­tors’ tac­tics. It is the most prom­i­nent bank to plead guilty in the US since Drexel Burn­ham Lam­bert in 1989, and the largest to do so since the Bankers Trust in 1999, a bank a frac­tion the size of Credit Suisse. For Credit Suisse, other than the fines and the rep­u­ta­tional stain of be­ing a felon, the im­pli­ca­tions are likely to be limited. The bank may lose some clients but is other­wise ex­pected to sur­vive largely un­scathed. The plea deal also en­ables it to move be­yond a case that had prompted a con­gres­sional hear­ing and had thrust the bank into an in­ter­na­tional squab­ble over tax dodg­ing. If the bank had con­tin­ued to fight the case, it would have been in­dicted.

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