Senin, 19 Mei 2014

DealBook: Credit Suisse Pleads Guilty in Tax Evasion Case

The headquarters of Credit Suisse in Zurich.Arnd Wiegmann/ReutersThe headquarters of Credit Suisse in Zurich. Related Links

Updated, 6:40 p.m. |
Credit Suisse has done what no other bank of its size and significance has done in over two decades: plead guilty to criminal wrongdoing.

In a sign that global banking giants are no longer immune from criminal charges — despite public concerns that financial institutions have grown so large and interconnected that they are "too big to jail" — federal prosecutors demanded that Credit Suisse's parent company plead guilty to helping thousands of American account holders hide their wealth and evade taxes.

In the Federal District Court in Alexandria, Va., a Credit Suisse lawyer, Alan Reifenberg,  accepted the plea agreement in a 45 minute hearing before Judge Rebecca B. Smith.

As part of a deal with the Justice Department, the Swiss bank agreed to plead to one count of conspiring to aid tax evasion. Credit Suisse, which has a giant investment bank in New York and whose chief executive is an American, will also pay about $2.6 billion in penalties and hire an independent monitor for up to two years.

"This case shows that no financial institution, no matter its size or global reach, is above the law," said Attorney General Eric Holder Jr.. "Credit Suisse conspired to help U.S. citizens hide assets in offshore accounts in order to evade paying taxes. When a bank engages in misconduct this brazen, it should expect that the Justice Department will pursue criminal prosecution to the fullest extent possible, as has happened here."

The severe rebuke from federal prosecutors — as well as from the Federal Reserve and New York State's banking regulator, Benjamin M. Lawsky, who agreed to punish the bank without shutting it down — stems in part from Credit Suisse's failure to fully cooperate with the United States government.

The resulting plea deal will strike a blow at overseas tax dodging and the shadowy world of Swiss bank secrecy, which had become a hallmark of the country's financial system and the scorn of American policy makers. The deal also signals a shift in prosecutors' policy. Credit Suisse is the most prominent bank to plead guilty since Drexel Burnham Lambert in 1989.

It took months of careful planning. Recognizing that criminal charges could prompt regulators to revoke a bank's license to operate, the corporate equivalent of the death penalty, prosecutors met with the Fed and Mr. Lawsky to discuss punishing Credit Suisse without putting it out of business and imperiling the economy, according to interviews with people briefed on the matter who were not authorized to speak publicly.

The Credit Suisse plea won't be the last. The case, which comes some three years after federal prosecutors in Virginia indicted eight Credit Suisse bankers, will provide a template for prosecuting other financial misdeeds — both present and future. BNP Paribas, France's largest bank, is next in line to plead guilty in the coming weeks, the people briefed on the matter said. The bank, which is suspected of doing business with countries like Sudan and Iran that the United States has blacklisted, will also pay more than $5 billion in fines, the people briefed on the matter said, and Mr. Lawsky is planning to penalize a dozen or so bank employees.

The BNP and Credit Suisse cases may also lay the groundwork for criminal actions against American banks. The new strategy applies to American banks like JPMorgan Chase and Citigroup, which are both the subject of criminal investigations, but those inquiries are at an earlier stage and it is unclear whether they would warrant charges.

Prosecutors were not always so aggressive. In the wake of the 2008 financial crisis, the Justice Department did not file any criminal cases against a Wall Street bank or its top leaders. And as fears of a financial panic grew, the British bank HSBC escaped money laundering charges in 2012, stoking an outcry that Wall Street banks have grown so important to the economy that they cannot be charged.

Against that backdrop, prosecutors homed in on the Credit Suisse case as a turning point in their pursuit of big banks. Credit Suisse's lawyers proposed a more modest guilty plea from a subsidiary rather than the parent company, the people briefed on the matter said, but prosecutors rebuffed the overtures. This case, the prosecutors decided, would finally demonstrate that no bank is "too big to jail."

For  Mr. Holder, blamed for enabling the idea that banks are "too big to jail," the new strategy offers a last opportunity to rewrite his legacy. In a recent video message posted on the Justice Department's website, Mr. Holder remarked that "there is no such thing as 'too big to jail,'" adding that his prosecutors continue "to pursue several important investigations" that he is "personally monitoring."

But the public and Congressional lust for Wall Street accountability may linger all the same. For one, the plea deal will not require the bank to turn over the names of its American clients, a hot-button issue in Congress. Credit Suisse has argued that Swiss law prevented it from turning over the names of its American clients.

And moving forward, extracting a guilty plea from an American bank could still prove challenging for prosecutors. While many foreign banks with operations in New York are regulated by Mr. Lawsky and the New York Fed, the vast majority of large American banks are overseen by a different regulator, the Office of the Comptroller of the Currency. Even though the comptroller, Thomas J. Curry, has been a fierce critic of erring banks, he has warned prosecutors that federal law could force him to revisit a bank's charter if it is criminally convicted.

What's more, the cases against Credit Suisse and BNP won't quell the lingering outrage over the financial crisis. While the Justice Department levied billions of dollars in penalties on JPMorgan and a number of other banks at the center of the crisis, those cases were civil rather than criminal.

The notion that a criminal conviction could jeopardize the financial system stems from the experience of Arthur Andersen, Enron's accounting firm. In the aftermath of a 2002 criminal conviction, Arthur Andersen went out of business.

Following that collapse, which claimed thousands of jobs, prosecutors adopted a more tentative approach to punishing big companies, relying instead on so-called "deferred-prosecution agreements." Such deals suspend charges against corporations in exchange for fines and other concessions.

Arthur Andersen also informed a case in 2012 against HSBC, the British bank accused of transferring billions of dollars for Iran and enabling Mexican drug cartels to move tainted money through its American branches. Fearing that a guilty plea would cost the bank its charter — and regulators warned that it might — prosecutors opted for a deferred prosecution agreement and a fine.

In the months that followed, prosecutors started to shift strategies. The Royal Bank of Scotland was forced to have a Japanese subsidiary plead guilty to manipulating interest rates.

But parent companies remained elusive. While prosecutors have obtained guilty pleas from companies in pharmaceuticals and other industries, it was not until Credit Suisse that prosecutors once again forced a bank to plead guilty.

The Credit Suisse case traces to earlier investigations of Swiss banks, which for decades helped wealthy Americans conceal their assets through clandestine accounts.

In 2012, federal prosecutors indicted Wegelin, Switzerland's oldest private bank. And three years before that, Switzerland's largest bank, UBS, struck a deferred-prosecution agreement and agreed to pay a $780 million settlement.

With Credit Suisse, Switzerland's second largest bank after UBS, authorities aimed higher.

The bank will pay the largest sum of money to the Justice Department, which will receive around $1.8 billion. Another $715 million will go to Mr. Lawsky, who was conducting his own investigation into the bank and forced the bank to hire an independent monitor to oversee operations in Switzerland and the United States. The bank will also pay $100 million to the Federal Reserve.

The federal money will flow to the United States Treasury, while the payment to Mr. Lawsky will enter New York state's coffers.

Elizabeth Olson contributed reporting.


source : http://rss.nytimes.com/c/34625/f/640316/s/3a9958a8/sc/25/l/0Ldealbook0Bnytimes0N0C20A140C0A50C190Ccredit0Esuisse0Eset0Eto0Eplead0Eguilty0Ein0Etax0Eevasion0Ecase0C0Dpartner0Frss0Gemc0Frss/story01.htm

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