The Securities and Exchange Commission recently revealed that Credit Suisse Group AG has agreed to pay close to $475 million to U.S. and U.K authorities. The amount includes $100 million to SEC for misleading investors and violating the Foreign Corrupt Practices Act (FCPA). The US regulator stated that Credit Suisse was involved in a scheme connected to two bond offerings and a syndicated loan that raised funds on behalf of state-owned entities in Mozambique.
The SEC noted that these transactions raised more than $1 billion. The funds were used for a hidden debt scheme, to pay kickbacks to now-indicted former Credit Suisse investment bankers along with their intermediaries, and bribe corrupt Mozambique government officials.
According to the US watchdog, the offering materials distributed to investors by Credit Suisse falsely stated that the proceeds would help develop Mozambique’s tuna fishing industry. The company did not disclose “the full extent and nature of Mozambique’s indebtedness and the risk of default arising from these transactions.”
The SEC highlighted that this stems from Credit Suisse’s deficient internal accounting controls. The failed to properly address significant and known risks concerning bribery.
Gurbir S. Grewal, Director of the SEC’s Division of Enforcement said:
When it comes to cross-border securities law violations, the SEC will continue to work collaboratively with overseas law enforcement and regulatory agencies to fulfill its Enforcement mission. Our action against Credit Suisse today is yet another example of our close and successful coordination with counterparts in Europe and Asia.
Anita B. Bandy, Associate Director of the SEC’s Division of Enforcement, added:
Credit Suisse provided investors with incomplete and misleading disclosures despite being uniquely positioned to understand the full extent of Mozambique’s mounting debt and serious risk of default based on its prior lending arrangements. The massive offering fraud was also a consequence of the bank’s significant lapses in internal accounting controls and repeated failure to respond to corruption risks.
Earlier this week, the Swiss Financial Market Supervisory Authority concluded its investigation into Credit Suisse and identified serious breaches of supervisory law. The Swiss regulator announced that it has imposed measures on the company, reprimanded two individuals and opened enforcement proceedings against three others.
