A federal judge on Tuesday ordered Credit Suisse to pay $5.8 billion in penalties for ignoring signs its banker was taking advantage of a billionaire client, saying the bank had failed “to live up to its obligations as a fiduciary.”
The “credit suisse lawsuit” is a lawsuit that was filed against Credit Suisse. The suit alleges that the bank ignored signs that one of their bankers was bilking a billionaire client.
Updated at 1:33 p.m. on March 29, 2022 ET
Credit Suisse has said that it would appeal the Bermuda court’s decision.
Getty Images/Fabrice Coffrini/Agence France-Presse
Credit Suisse Group AG must pay billionaire Bidzina Ivanishvili $555 million after allowing a private banker to steal from him and mismanage his funds, according to a Bermuda court.
After his private banker, Patrice Lescaudron, acknowledged to clipping and pasting signatures to make unlawful stock bets, Mr. Ivanishvili sued the bank for violation of contract and fiduciary responsibility. Credit Suisse CS 3.53 percent argued it was also a victim of Mr. Lescaudron’s acts and shouldn’t be held culpable.
Mr. Lescaudron’s earnings took precedence over Mr. Ivanishvili’s and other customers’ interests, according to a judgement by Bermuda Supreme Court Chief Justice Narinder Hargun on Tuesday. According to the court, Credit Suisse knew or should have known that Mr. Lescaudron had been illegally mismanaging Mr. Ivanishvili’s accounts since 2007. One of Mr. Lescaudron’s stock choices dropped in value in 2015, exposing the deception.
In 2018, Mr. Lescaudron was sentenced to five years in prison in Switzerland for fraud and forgery. He spent pretrial imprisonment and a portion of his sentence before being released in 2019 and committing himself in 2020.
The judgement resulted in damages of more than $500 million, according to Credit Suisse. The bank said that it will appeal the decision.
Credit Suisse’s refusal to compensate Mr. Ivanishvili for the money it concedes was stolen, according to a representative for Mr. Ivanishvili, is startling. Mr. Ivanishvili is pursuing a similar complaint against the bank in Singapore.
Mr. Ivanishvili’s final damages in the Bermuda case will be calculated based on what he would have earned from his Bermuda accounts if his money had been put in a medium-risk investment portfolio from March 29 to March 29. According to one estimate, that sum will be about $555 million by July 2020.
Beginning in 2005, Mr. Ivanishvili invested more than $1 billion with Credit Suisse over a ten-year period.
The Bermuda court based its decision on a 2017 report commissioned by Switzerland’s financial regulator, which found that about a dozen Credit Suisse executives or managers were aware that Mr. Lescaudron was breaking rules on a regular basis but turned a blind eye, proposed lenient punishment, or otherwise glossed over the issues because he brought in about $25 million in revenue per year.
Credit Suisse attempted to prevent the study from being disclosed with Mr. Ivanishvili in the Bermuda proceedings, despite the fact that its contents were originally revealed by The Wall Street Journal in February 2021.
Margot Patrick can be reached at [email protected]
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‘Credit Suisse Is Ruled Liable for Fraud,’ appeared in the print edition on March 30, 2022.
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