Credit Suisse to pay $197 mn to settle US regulatory case
24 February 2014
Credit Suisse Group has agreed to pay $197 million to US regulators for servicing US clients without regulatory approval, but may still be slapped with a bigger fine on criminal charges of allegedly helping Americans evade taxes.
Under the settlement, Credit Suisse, Switzerland's second-biggest bank, will pay $82.2 million in disgorgement, $64.3 million in prejudgment interest and a $50 million penalty.
The US Securities and Exchange Commission (SEC) charged Credit Suisse for violating the federal securities laws by providing brokerage and investment advisory services to US clients and collected $82 million as fees without first registering with the SEC.
The SEC alleges the Zurich-based lender provided securities services to thousands of Americans and collected $82 million as fees without registration as required under the federal securities laws.
The SEC says that Credit Suisse relationship managers travelled to the US to solicit clients, provide investment advice, and induce securities transactions although they were not registered to provide brokerage or advisory services. The relationship managers also communicated with clients in the US through overseas e-mails and phone calls.
The SEC goes on to allege that the Zurich-based lender began offering advisory and brokerage services to US clients as early as 2002, amassing as many as 8,500 client accounts that contained an average total of $5.6 billion in securities assets.
''As a multinational firm with a significant US presence, Credit Suisse was well aware of the steps that a firm needs to take to legally conduct advisory or brokerage business with US clients,'' said Scott Friestad, an associate director in the SEC's Division of Enforcement.
The bank is among the 14 other financial institutions that are under criminal probe on whether they helped US clients evaded taxes by stashing money in hidden accounts in Switzerland.
UBS AG, Switzerland largest bank, was forced to pay $780 million in 2009 to settle US criminal and civil probes for helping wealthy US clients to conceal their ownership of assets held offshore by creating bogus entities and then filing IRS forms falsely claiming the entities owned the accounts.
''We are pleased to have resolved this issue with the SEC. The Department of Justice (DoJ) investigation into tax-related issues remains outstanding, and while we continue to work to resolve this matter, the timing and outcome remain uncertain,'' Credit Suisse said in a release.