In order to determine if Credit Suisse deceived investors about its financial situation as it teetered on a state-backed rescue by UBS six months ago, US regulators are looking for proof from the bank.
UBS stated in a financial report on August 31 that Credit Suisse “has received requests for documents and information” from organisations such as the U.S. Securities and Exchange Commission, the U.S. Justice Department, and Swiss regulator FINMA.
Three U.S. class-action lawsuits have been brought against Credit Suisse, as well as current and former directors, according to the note, which is a part of UBS’s 124-page second-quarter report. The lawsuits claim that Credit Suisse made false claims regarding customers withdrawing cash in late 2022.
UBS noted in the filing that Credit Suisse, which is now a part of it, is working with the law enforcement.
After tens of billions of dollars departed Credit Suisse amid a crisis of confidence in a market already shaken by the failure of major smaller U.S. bankers, UBS swooped in to save its rival in a government-organized bailout in March.
A lender with a $1.7 trillion balance sheet was created as a result of the largest banking transaction since the global financial crisis. The investigations have brought UBS’s possible exposure to fines and penalties to light.
While UBS and the Justice Department did not reply to requests for comment, Credit Suisse and a spokeswoman for the SEC did.
A spokesman noted that although declining to comment specifically on this situation, FINMA closely monitors the bank and makes relevant information and document requests as part of its oversight.
Reuters was unable to identify the disclosure period that the SEC, DOJ, and FINMA are examining or, if any Credit Suisse workers may be the focus.
According to a report from Reuters at the end of February, FINMA was investigating whether statements made at the time by Axel Lehmann, chairman of Credit Suisse, regarding the stabilisation of outflows in early December were potentially misleading. Lehmann and Credit Suisse made no comments at the time.
On March 10, the regulator declared that there weren’t enough grounds to bring legal action against the bank in this situation.
Tuesday’s request for comment from Lehmann did not receive an immediate response.
During the final three months of 2022, Credit Suisse experienced withdrawals of 110.5 billion Swiss francs ($124 billion), which brought the bank dangerously near to collapse. The first part of 2023 saw a continuation of these exodus.
Early on March 16, Credit Suisse announced its intention to “pre-emptively” increase its cash buffers by borrowing from the SNB using the Emergency Liquidity Assistance (ELA) facility.
However, despite Credit Suisse’s claims that the 50 billion franc injection would speed up its turnaround and that it would continue to operate as a viable company, the bank still need additional funding and was out of collateral to pledge to the central bank.
The day the rescue merger was announced on March 19, a FINMA filing on Credit Suisse’s extra Tier-1 bonds stated that as of mid-March, Credit Suisse was on the verge of sliding below minimal levels of cash maintained at the Swiss central bank, endangering its ability to make payments as required.