Credit Suisse Awaits United States Jury on FX Rigging Lawsuit, 15 Banks Have Paid $2.31 Billion in Settlement
20th October 2022 | Hong Kong
Credit Suisse is awaiting a United States jury decision on their foreign exchange (FX) rigging lawsuit, with 15 banks already paid a total of $2.31 billion in settlements. Earlier in June 2022, 13 banks including UBS, BNP Paribas, Bank of America and Barclays have agreed to pay $91 million in an investor class action settlement (New York, United States federal court) for Singapore interest rate rigging conspiracy. 6 defendants who have already agreed to pay the settlement of $64 million are Credit Suisse, Deutsche Bank, HSBC, ING, Citibank & JP Morgan. Both settlements bring the total number of banks involved to 19, and the total settlement of $155 million.
“ Credit Suisse Awaits United States Jury on FX Rigging Lawsuit, 15 Banks Have Paid $2.31 Billion in Settlement “
Earlier in October 2022, Credit Suisse reached a $495 million settlement ($300 million in restitution for investors) for fraud in the sale of toxic mortgage-backed securities between 2006 to 2007 (before the 2008 Global Financial Crisis), with Credit Suisse paying a total $5.875 billion fine since 2017 (United States Department of Justice $5.28 billion in 2017; New York Department of Justice $10 million in 2018, New Jersey Attorney General Office $495 million in 2022). Credit Suisse will make a one-time payment of $495 million to fully resolve claims tied to more than $10 billion.
Also in October 2022, Credit Suisse is reported to be under investigation by the United States authorities (Department of Justice) for helping clients evade tax, continuing to do so after the 2014 tax settlement fine of $2.6 billion. The investigation is focused on clients in United States (with South American Passports). In September 2022, Credit Suisse reached a $32.5 million settlement shareholders’s lawsuit for misleading shareholders (United States District Court in Manhattan) on strong risk management, including exposure to collapsed $120 billion Archegos family office & $10 billion Greensill Funds. In December 2021, Credit Suisse fired 2 investment managers (Portfolio Manager & Head of Fixed Income) who were involved in the failed $10 billion Greenhill Fund. Credit Suisse was hit by the troubled Greensill $10 billion supply-chain financing fund, which was introduced as a safe investment product to many of its institutional clients including pension funds and sovereign wealth funds. In 2022 April, Credit Suisse Life Bermuda lost a $500 million lawsuit to former Georgian Prime Minister Bidzina Ivanishvili for illegal trades by former Credit Suisse Private Banker Patrice Lescaudron that resulted in hundreds of millions of losses. In 2018, former Credit Suisse Private Banker Patrice Lescaudron was convicted in Switzerland for forging client signatures to 5 years imprisonment, and later committed suicide in 2020. In September 2022, Bidzina Ivanishvili sued Credit Suisse Trust in Singapore for losing $1.27 billion for failing to safeguard his investments in a fraud committed by former Switzerland-based private banker Patrice Lescaudron. The trial began in Singapore on the 5th of September 2022. At the opening statement, Credit Suisse Trust had calculated the losses at $818.2 million, instead of the estimate of $1.27 billion by Bidzina Ivanishvili.
In July 2022, Credit Suisse had been fined $2.1 million by a federal criminal court (Switzerland) for money laundering linked to a Bulgarian cocaine trafficking crime ring, with a further payment of around $20 million to be paid to the Swiss government and a former Credit Suisse employee sentenced to 20 months imprisonment. The case happened more than 14 years ago and Credit Suisse will appeal the court decision. Credit Suisse Statement: “Credit Suisse Group has taken note of the Swiss Federal Criminal Court’s decision to impose a fine of CHF 2 million against Credit Suisse AG for certain historical organizational inadequacies (article 102 of the Swiss Criminal Code) for the period between July 2007 and December 2008. The investigation dates back more than 14 years. The bank will appeal the decision.
2021 – European Commission Fines UBS, Barclays, RBS, HSBC & Credit Suisse $389 Million for FX Spot Trading Cartel
In 2021 December, the European Commission (EC) fined UBS, Barclays, RBS, HSBC & Credit Suisse $389 Million (€344 million) for Foreign Exchange spot trading cartel (FX, Forex). The European Commission’s investigation revealed that some traders in charge of the Forex spot trading of G10 currencies, acting on behalf of the fined banks, exchanged sensitive information and trading plans, and occasionally coordinated their trading strategies through an online professional chatroom called Sterling Lads. These information exchanges enabled the traders to make informed market decisions on whether and when to sell or buy the currencies they had in their portfolios, as opposed to a situation where traders acting independently from each other take an inherent risk in taking these decisions. Occasionally, these information exchanges also allowed the traders to identify opportunities for coordination, for example through a practice called “standing down”, whereby some of them would temporarily refrain from trading to avoid interfering with another trader.
In 2021 May, the European Commission fined Nomura, UBS and Unicredit $451 million for rigging European Government Bond prices between 2007 to 2011. Bank of America, Natixis, RBS (now NatWest) and WestLB (now Portigon) that have breached European Union (EU) antitrust rules and involved in the rigging of European bond prices are not fined because their infringement falls outside the limitation period for imposition of fines and for WestLB, it did not generate any net turnover in the last business year (fine imposed is a percentage of revenue)
G10 Currency Investigation
The Commission’s investigation focused on the trading of the G10 currencies, the most liquid and traded currencies worldwide. When companies exchange large amounts of different currencies, they usually do so through a Forex trader. The main customers of Forex traders include asset managers, pension funds, hedge funds, major companies and other banks. (Cartel: a combination of independent commercial or industrial enterprises designed to limit competition or fix prices)
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