Credit Suisse Faces Enforcement Proceedings Over Spying Scandal -- Update
September 02 2020 - 3:48AM
Dow Jones News
By Margot Patrick
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 potential 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. The regulator appointed an outside lawyer to investigate
the surveillance earlier this year.
In February, Chief Executive Tidjane Thiam resigned after 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." It said observing
employees isn't part of its culture.
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 the activities had taken place without Mr. Thiam's
knowledge.
The second 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 02, 2020 04:33 ET (08:33 GMT)
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