Credit Suisse Group AG (CSGN), facing a U.S. criminal probe of whether it helped Americans evade taxes, is close to resolving the case with an agreement that may include a penalty of more than $1 billion and a guilty plea, according to a person familiar with the matter.
The person, who asked not to be named because the negotiations are confidential, didn’t specify whether the plea would be entered by the entire firm or a subsidiary. Credit Suisse, the largest of 14 Swiss banks facing criminal tax probes by the U.S., was told in 2011 that it was a target of prosecutors.
U.S. Attorney General Eric Holder said yesterday that his department is readying criminal cases against banks that show financial institutions aren’t too big to prosecute, without specifying any firms.
Intense negotiations are under way between Credit Suisse and U.S. prosecutors over the Justice Department’s crackdown on offshore tax evasion, and an agreement is expected to come soon, people familiar with the matter said yesterday.
Credit Suisse spokesman Calvin Mitchell and Brian Fallon, a Justice Department spokesman, declined to comment on the negotiations.
The Zurich-based bank created a separate legal entity last year called CS International Advisors AG to house the U.S. cross-border business that has drawn the legal scrutiny. Credit Suisse transferred 242 million francs ($276 million) of assets and 238 million francs of liabilities to the unit including 1,040 active accounts, 43,018 accounts that had already been closed as well as 1,144 dormant accounts, documents show.
The conduct in the Credit Suisse case, including the behavior of the bank during the probe, is said to be driving the push for a criminal charge, a person familiar with the situation has said.
Swiss officials would view an indictment of Credit Suisse as destabilizing for the bank and broader financial system, according to sources familiar with the matter. The U.S. is seen as more likely to seek a negotiated settlement in which a unit or the bank’s holding company pleads guilty, the sources said, asking not to be named because discussions are confidential. An agreement is expected to come quickly, the sources said.
A Senate subcommittee, in a report released in February, said 1,800 Credit Suisse employees helped Americans open 22,000 accounts, most of which were hidden from the Internal Revenue Service. Credit Suisse Chief Executive Officer Brady Dougan apologized to lawmakers during a Feb. 26 hearing and deflected blame onto a small group of employees.
Credit Suisse said April 3 that it increased reserves to 720 million francs to resolve the U.S. case. The bank also agreed Feb. 21 to pay $197 million to the U.S. Securities and Exchange Commission for providing cross-border securities services to thousands of Americans without registering to conduct the business.
The Wall Street Journal reported yesterday that a settlement may exceed $1 billion. It may go as high as $1.6 billion, Reuters wrote, citing an unidentified person familiar with the matter.
In addition to Credit Suisse, the prosecutors are also nearing a decision on whether to charge BNP Paribas SA (BNP) for violations of sanctions barring business with prohibited countries, a person familiar with the probe has said.
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