Credit Suisse Pulled Into Geneva Fight Over Lost Client Cash

  • Russians name bank as a potential target, according to lawyer
  • Ex-manager accused in Geneva of defrauding banks' clients

Credit Suisse Group AG has been dragged into a second criminal complaint brought by two Russian clients who claim that a former manager in the bank’s wealth management unit made unauthorized transactions to cover up trading losses.

The new complaint filed Monday by the two businessmen alleges criminal mismanagement and abuse of confidence, according to their Geneva-based lawyer Giorgio Campa. He said the complaint also cites Credit Suisse as a potential target if wrongdoing can’t be attributed to an individual, which could open the bank to wider liability.

The case creates a hurdle for bank as Chief Executive Officer Tidjane Thiam attempts to build up its wealth management business and move away from riskier investment banking. As the number of complaints grows, the case also threatens to reveal more allegations about trading by the banker who’s accused of taking money from some clients to plug holes in other accounts.

Flight Risk

The banker -- who can’t be named under Swiss law -- has been charged with fraud and criminal mismanagement by Geneva prosecutors. The Frenchman is being held in a Geneva prison and wasn’t released on bail as he is deemed as a flight risk given France doesn’t extradite its own citizens. He joined Credit Suisse in 2004 to find new Russian clients and worked for the bank until September when he was fired and Credit Suisse began investing his trades.

Credit Suisse has lost more than a third of its value in Zurich trading this year as the bank pulls out of some trading businesses.

Henri Della Casa, a spokesman for the Geneva prosecutor’s office, acknowledged the complaint, saying it also includes an accusation of fraud and filing of false documents. A spokesman for Credit Suisse didn’t have any immediate comment. A lawyer for the banker didn’t immediately return a message seeking comment.

According to the Swiss Criminal Code, Credit Suisse could be implicated “if a felony or misdemeanor is committed in an undertaking in the exercise of commercial activities” and “if it is not possible to attribute this act to any specific natural person due to the inadequate organization of the undertaking.” The company could be fined up to 5 million Swiss francs ($5 million).

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