Choose from 103 languages here:




Email Us   |  Client Registration

The blog of the FRCS website


A Million Lives

  Uploaded - Thursday, November 16, 2017

Relevance of the image - the largest nuclear explosion ever filmed (1.6 megaton): it is an indication of the next Financial Crisis - vastly more powerful, destructive beyond comprehension, potentially devastating life as we have known it. (The largest nuclear explosion ever was 50 megaton).

Before the last financial crisis, FRCS warned the world that organized crime in banks would bring financial calamity - it did exactly that!

FRCS warned that honest banks could not compete against criminal banks - hundreds went bankrupt because they refused to engage in crime.

We are now warning that organized crime in banks has become worse.

Even old traditional banks like Australian Commonwealth Bank and Danish Danske and Nordea Banks have entered into the criminal bank zone.

Bank crime is like a contagious disease which is spreading rampantly - because of the easy "criminal profits" and corruption they bring.

Unless action is taken NOW, the next financial crisis will be worse.

The people in power refused to listen to us the last time, and they are not listening now.

Our answer is to warn honest people:

A Million Lives: the Movie

Dedicated to the million people who died because of organized crime in the financial system - stupidly called "the financial crisis".

Donate here to support our work warning honest people.

The death toll from both Hiroshima and Nagasaki atomic bombs was around 250,000 - less than a quarter of those who died because of the Great Organized Crime Recession. It was misnamed the Global Financial Crisis - as if "no-one was the blame." 

The causes - organized crime - were never addressed - have now escalated, making it likely to repeat itself in a more severe form.

The above image shows the explosion of a megaton hydrogen bomb - around 40 times more powerful than the combined power of the two bombs dropped on those Japanese cities.

The image is an indication of the next Financial Crisis - vastly more powerful, destructive beyond comprehension, potentially devastating life as we have known it.

The Difference

The threat of nuclear war was tangible and inescapable, but the coming financial war is approaching invisibly.

Powerful and wealthy people would suffer with the rest of us in a nuclear war. 

Russian and US politicians were horrified that they could so easily destroy the world - and they stopped their madness.

Not so in a financial war.

For years, powerful and wealthy people have prepared for the next financial calamity by hiding trillions of dollars into secrecy jurisdictions and tax havens.

They will be on the beaches of Bermuda while good people die by the thousands.

The rest of us have been stuck with paying off debts from bailing out criminal banks and paying for the immense damage they did. 

There is nothing effective which is containing crime in the financial system.

The last Financial Crisis was caused by organized crime in banks - and the  next one will be too.

But it will be worse - unless action is taken now:

None of the chief perpetrators were jailed and most kept obscene bonuses.

Profitable crime will only grow until stopped.

Donate here to support our work.

A hundred years from now, historians and economists will curse this generation for being "stupid beyond belief" for putting everyone at risk by allowing criminal banks with "no conscience or remorse" to roam free, as top predators, able to buy influence - to fund terrorists, murderers, drug dealers and nuclear bombs - to control politicians, pension funds and vast swathes of economic activity - and to crucify loyal employees as "sacrificial rogues" in order to conceal and continue evil activities. On that, at least, we can all agree.

The Business Assessment

David M. Einhorn is an American hedge fund manager, and philanthropist. He is president of Greenlight Capital. It has generated 16.5% annualized return for investors from 1996 to 2016. As of 2017, Greenlight Capital has US$9.27 billion in assets under management. He bet against Lehman Brothers before it collapsed and won.
Einhorn was ranked 44th in the Time 100 most influential list of people in the world in 2013. According to Forbes Magazine, Einhorn has a net worth of US$1.54 billion, making him the 44th youngest billionaire on the Forbes 400. These are quotes from his Oxford Union address this week:

The world has not learned from the financial crisis
We are still hanging on to the criminals of the financial crisis
If you took all of the obvious problems from the financial crisis, we kind of solved none of them
We sweep as much under the rug as we can and move on as quickly as we can
Issues That Caused the Crisis Are Not Solved

The Political Assessment

Gordon Brown was Prime Minister of the United Kingdom from 2007 to 2010. Brown was a Member of Parliament from 1983 to 2015. He is now the United Nations special envoy for global education. These are extracts from his new book entitled My Life, Our Times:

Banks have not learnt lessons of 2008 crisis
bankers (are) still ‘rewarded for failure’
Little has changed since the promise in 2009 that we bring finance to heel
The banks that were deemed ‘too big to fail’ are now even bigger.
bankers were still being “rewarded for failure”. He said that instead of being thrown in jail for dishonest conduct, bankers were paid too much and could fall back on state support if things went wrong. Mr Brown added that in the next crisis regulators “would still not know what is owed and by whom and to whom” because of the way assets have shifted out of banks into the more lightly regulated “shadow banking” system. He said that “2009 has proved to be the turning point at which history has failed to turn”. If bankers’ conduct was dishonest by the ordinary standards of what is reasonable and honest, should there not have been prosecutions in the UK as we have seen in Ireland, Iceland, Spain and Portugal? “Dividends and bankers’ pay today represent almost exactly the same share of banks’ revenues as before the crisis hit,”
a “more relevant” tool to crack down on bankers who carry out fraud, fail to disclose information or abuse their position would be the 2006 fraud act
Barclays’ strategy during the crisis was “unconscionable”,
Fred Goodwin, the disgraced former chief executive of RBS, who was stripped of his knighthood after being fired in the wake of a £45bn bailout of RBS by the government in 2009. By the time the bank collapsed he had from his company a private suite in the Savoy costing £700,000 a year, a fleet of 12 chauffeur-driven Mercedes limousines with RBS emblazoned all over them, and he regularly used a private jet at the weekend — whether for boar hunting in Spain or following the glamorous F1 circuit around the world.” He recalled how Mr Goodwin was the only banker to oppose a plan to fund community causes using as much as £1bn of “orphan assets” left in banks by customers who disappeared or died without leaving any instruction for their money.

The Expert Assessment

Professor Larry Randall Wray is professor of Economics at the University of Missouri–Kansas City, Senior Scholar at the Levy Economics Institute of Bard College and Research Director of the Center for Full Employment and Price Stability. These are extracts from his research paper "Lessons We Should Have Learned from the Global Financial Crisis but Didn’t" written for the Levy Economics Institute:

... the worst part is the cover-up of the crimes. …. we cannot resolve the crisis until we begin going after the fraud.

Unregulated and unsupervised financial institutions naturally evolve into control frauds.

… so far, none of the big Wall Street crooks have been prosecuted for high crimes. There have been some fines and civil cases, and a few lesser criminals like Bernie Madoff were sacrificed, but all the big banksters are not only free—they are still running their criminal organizations (called “chartered banks” in polite conversation), advising the White House, and gearing up to fund the next presidential campaign. Nothing can be done until the next Wall Street–induced crash.

It was massive insolvency across at least the largest financial institutions (both banks and shadow banks) that led to the “run on liquidity” (really, a refusal to refinance one’s fellow crooks—criminal enterprise always relies on trust, and when that breaks down, war breaks out.)

…. all backed by nothing other than a fog of deceit. All it took was for one gambling banker to call the bluff. Every banker looked for an even bigger sucker to refinance the junk. The only saps left standing sat (so to speak) in Washington. And that is why it took tens of trillions of lending, spending, and guaranteeing of trash by Uncle Sam acting as sucker of last resort to stop the carnage. (As every gambler knows, if you do not know who the sucker is within five minutes of beginning the game, you are the sucker.)

The hired gun in charge of a financial institution can strip the bank of far more money than the owners or bank robbers will ever get.

But policy makers still do not want to recognize that there is fraud everywhere. We know that the banks committed lender fraud on an unprecedented scale (the best estimate is that 80% of all mortgage fraud was committed by lenders); we know they continue to commit foreclosure fraud (and that their creation, MERS—Mortgage Electronic Registry System—has irretrievably damaged the nation’s property records; this will take a decade to sort out); and we know they duped investors into buying toxic waste securities (using bait and switch— substituting the worst mortgages into the pools) and then bet against them using credit default swaps. Every time an investigator finally musters the courage to go after one of these banks, fraud is uncovered and a settlement is recovered.

It is apparent that fraud became normal business practice. I have compared the home finance food chain to Shrek’s onion: every layer was not only complex, but also fraudulent, from the real estate agents to the appraisers and mortgage brokers who overpriced the property and induced borrowers into terms they could not afford, to the investment banks and their subsidiary trusts that securitized the mortgages, to the credit ratings agencies and accounting firms that validated values and practices, to the servicers and judges who allow banks to steal homes, and on to CEOs and lawyers who signed off on the fraud. To say that this is the biggest scandal in human history is an understatement. And the fraudsters are still running the institutions.

The lender banks created Orwellian-named “affordability products” that insiders called neutron bomb mortgages (designed to blow up and kill the borrower, but leave the home standing) and told the brokers to make those and to refuse the usual documents required for loans—such as W-2 forms and bank account information. Why? As Ollie North put it, “plausible deniability.” Banks could claim “Hey, we didn’t know this unemployed guy couldn’t afford a half million dollar home in Brookside Acres with an exploding adjustable rate mortgage loan at 120% of home value! That borrower defrauded us (add whimpers for effect)!”

... lending was so much easier and cheaper to do if you did not bother to check the financial capacity of the borrower. Hence, we ended up with Liar’s Loans and NINJA Loans (no income, no job, no assets, no problem!).

Once a bank has made a Liar’s Loan, every other link in the home finance chain must be tainted. And that means every transaction, every certification, every rating, and every signature all the way up to the CEO of the investment bank is part of the cover-up.

… the biggest banks have been paying a series of fines imposed for fraudulent behavior.

The only questions remaining for everyone operating in that chain were these: How can I make a buck? How can I get out of this Ponzi scheme before it collapses? And how can I stay out of jail? As we know, they made the bucks as they were rewarded with multi-million dollar bonuses. While most did not exit before the collapse, Uncle Sam covered their losses with trillions of dollars of bailout. And now they are waiting for the statute of limitations on their probable crimes to run out while the nation’s top cops look the other way.

Another path to crisis could be that banking supervisors discover that a major bank is massively insolvent. There is no question that banks have been cooking their books—largely to justify reduction of loan loss reserves in order to record profits so that bonuses can be paid. The problems could begin at Bank of America, or CitiBank, both of which are saddled with bad mortgage debt that they have not written down sufficiently. Many analysts think they are insolvent, so all that is needed to trigger a crisis is for some information to get out, leading to downgraded credit ratings and generating another huge liquidity crisis. Fortunately or unfortunately, Congress is probably not going to let the Fed do what it did last time. Indeed, after Dodd-Frank, most of the actions taken by the Fed and Treasury in the 2007–08 crisis are now illegal or require approval of the President and/or the Congress. It is not likely that such approval could be obtained quickly enough to avert a run.

There is another avenue for contagion. Many people think that European banks are more fragile than American banks, so the problem could start in Europe then spill over to the United States. There is a very easy path from US money market mutual fund holdings of Eurobank assets to a global financial crisis. That is $3 trillion of extremely short-term liabilities that are like deposits, but not insured. Last time, the US government extended the guarantee to all of them; Dodd-Frank outlaws such intervention.

So appearance of a problem among Eurobanks could bring down that whole market—about twice the size of the US subprime mortgages that brought on the global financial crisis last time.

Unfortunately, we haven’t learned any of these lessons. We’ve done no reforming. We let the Ponzi schemes continue, run by the same crooks.

…. economies of scale in banking are reached at a very small size. Supposed economies of scope have proven to be mostly the ability to dupe customers with “bait and switch” schemes. Charles Keating’s Lincoln Savings used its FDIC seal of approval to sell risky and ultimately worthless assets to its elderly widows who thought they were buying insured certificates of deposit (CDs). More recently, Goldman Sachs allowed hedge fund manager Paulson to design sure-to-fail synthetic collateralized debt obligations (CDOs) that Goldman sold to its own customers, allowing both Goldman and Paulson to use credit default swaps (CDSs) to bet on failure (Eisinger and Bernstein, 2010). In other words, the “synergy” allows the institution to bet against its customers. Worse, large institutions invariably become too complex to manage, regulate, or supervise. This allows top management to run the institution as a control fraud, duping owners of equity while top management is enriched. And, finally, since the institution is thought to be “too big to fail,” government will also get swindled when it is called in for the inevitable bailout.

Criminal Banks Funded Nuclear Bombs

  Uploaded - Thursday, August 17, 2017

Picture Credit (LIFE Picture Collection): The lion is real and alive. Noel Marshall (husband of Tippi Hedren) is working in his study while Neil the "pet" lion hovers. Neil (the lion) had the "run of the house" while Noel, Tippi and her daughter Melanie Griffith were shooting the movie "Roar". It was the most dangerous movie ever made.

No animals were harmed in the movie, but around 70 humans were, with the real blood and screams recorded in the movie. Watch a 2 minute segment here

Assistant Director Doron Kauper had his throat bitten open (an inch from the jugular), his jaw was bitten, and one of the lions attempted to rip an ear off. He was also injured in the head, chest, and thigh. Melanie Griffith’s face-mauling scene in the movie was real.

Tippi Hedren has since acknowledged that it was "stupid beyond belief" to put her family at risk by allowing an animal with "no conscience or remorse genes" to roam free. On that, at least, we can all agree.

Why this photo? A hundred years from now, historians and economists will curse this generation for being "stupid beyond belief" for putting everyone at risk by allowing criminal banks with "no conscience or remorse" to roam free, as top predators, able to buy influence - to fund terrorists, murderers, drug dealers and nuclear bombs - to control politicians, pension funds and vast swathes of economic activity - and to crucify loyal employees as "sacrificial rogues" in order to conceal and continue evil activities. On that, at least, we can all agree.

Lions are far safer than criminal banks because they limit their appetite to what they need, they behave according to their nature, and so they can not be regarded as inherently evil.

Not so criminal banks who have financed nuclear weapons for rogue states for profits they didn't need - to satisfy grotesque greeds, secret agendas and who knows what else?

Criminal Banks Finance Nuclear Bombs

North Korea and Iran obtained their nuclear bomb technology from Pakistan. Both Pakistan's nuclear program and the criminal sale of that technology was financed and arranged by a criminal bank - BCCI (Bank of Credit & Commerce International). 

BCCI was able to do that and more because it was a "politically connected and protected bank". It bribed corrupt politicians in the US and elsewhere. It was used by the CIA and other US agencies for covert operations, arms shipments and financing.

The US DOJ protected BCCI and obstructed other agencies from investigating it. Robert Morgenthau, the Manhattan (New York) district attorney, launched investigations into BCCI and complained: "We have had no cooperation from the Justice Department since we first asked for records ..... In fact they are impeding our investigation, and Justice Department representatives are asking witnesses not to cooperate with us."

BCCI was found it to be involved in money laundering, bribery, support of terrorism, arms trafficking, the sale of nuclear technologies, the commission and facilitation of tax evasion, smuggling, illegal immigration, and the illicit purchases of banks and real estate.

Criminal Banks & Nuclear Bombs - Stupid beyond belief

More recently, Credit Suisse was prosecuted for a jaw-dropping management protected criminal scheme to finance Iran's program for developing nuclear missiles and weapons. It used two of its biggest pension management subsidiaries in a sophisticated scheme of criminal money laundering.

Credit Suisse Similar to BCCI

The parallels between these two criminal banks are astonishing. The enormity of the crimes perpetrated by BCCI only became public because it was raided, closed down and audited. A fair comparison would be to compare the status of the two criminal banks at their equivalent historical positions. Before BCCI was shut down, it was politically connected and protected by the DOJ. Investigations into it were obstructed and starved of resources to the point that they were completely ineffective.

The DOJ's main probe of BCCI was handled by a sole Assistant U.S. Attorney in Tampa, who was then assigned another major case. Similar understaffing was evident in a Miami grand jury probe of the relationship between BCCI and the CenTrust savings and loan, whose failure is estimated to have cost taxpayers $2 billion. Vital documents disappeared while under US control. This accounts for the fact that a 16-month investigation yielded no indictments, despite the bank's gargantuan criminal network.

Likewise, the DOJ paid empty lip-service to investigating CS's crimes but only published a joke of a summary, while rejecting massive evidence of monstrous crimes.

The DOJ jailed the whistle-blower reporting the bank's tax evasion frauds. It also jailed the lawyer representing pensioner victims of the Enron fraud wanting the bank to pay compensation for its part in setting the crime up.

As for the bank - the DOJ gave it a "free pass" for crimes which would nearly lock away an ordinary person "forever".

Ordinary taxpayers who paid the salaries of the DOJ staff were abandoned when defrauded of billions - and received next to nothing.

North Korean Nuclear Know-how - Bought by Corruption

North Korea bribed Pakistani officials to obtain its nuclear technology, according to a letter obtained by the Washington Post. Pakistan developed its nuclear technology as a defense to India's nuclear capability and it was sold onto Iran, Libya and North Korea. Of the three, only Libya negotiated a voluntary agreement to relinquish nuclear weapons. Its government was overthrown, and North Korea emphasises that is the reason it will never give up its nuclear "deterrent".

The greatest fear has been that wealthy terrorist organizations like ISIS and its successors (there will be more) shall follow the same route as North Korea, e.g. that:

Terrorists will bribe Pakistani officials to obtain nuclear bomb materials.

Pakistan President Musharraf even permitted the disgraced founder of Pakistan's nuclear-weapons program - Abdul Qadeer Khan - to keep the vast wealth he accumulated selling atom bomb-making technology to rogue states - Libya, Iran and North Korea. He simply said he was grateful for the bomb that Khan supplied, which India already possessed without huge opposition from those now complaining about North Korea.

Criminal Bank Freedom: Stupid beyond belief

Sophisticated concealment obstructs transparency into the modern criminal bank's operations. The following series of photos is an analogy to the current "stupidity" in allowing them to roam free and devour innocent prey, except that the lions are far less dangerous and shouldn't be regarded as evil.

Does this remind you of politicians playing games for political donations?

Bank Brushes Off $Billion Laundering

  Uploaded - Monday, August 07, 2017

Cartoon credit: Jon Kudelka
This cartoon  refers to the so-called Australian "Inquiry" into the banks (it was a bad joke - don't laugh) which had done some really bad things. However, only politicians were allowed to ask questions for a maximum of 15 minutes each. As usual, victims and whistle-blowers were prohibited. Quite serious people said it was a farce designed to protect the banks. Others disagreed. Surprise: most Australians believe there needs to be a thorough inquiry called a Royal Commission into the banks. Buy John's prints and calendars here. You will like them.

The consequences: around a year ago, the business-friendly Australian government decided NOT to have a real inquiry into the problem.

Since profitable crime always grows until prosecuted - well, of course it did. 

This week it was up to around a billion dollars of money-laundering, potentially for drug syndicates, terrorists and a wide range of other criminals.

When banks commit gigantic crimes, otherwise normally serious people lose their sense of proportion and pretend it is no big deal.

Sadly, this case appears to be following that pattern. As for the victims of the crime - not a word of apology or hint of compensation. 

Everyone seems to pretend that money-laundering is a victim-less crime, a bit like crimes against poor people, youth, minorities or someone whose religion you don't like, or just about any powerless group.

AU Bank Brushes Off $Billion Laundering

Only the Symptom Exposed - not the Cause
The known symptom of the problem was the zero risk assessment for huge cash deposits through new intelligent deposit machines (IDMs). An IDM is just a new type of ATM (ATM = automatic teller machines which are everywhere now). Around $9 billion of cash was deposited before someone started to wonder why their use was so popular for big untraceable cash deposits which were rapidly sent offshore to effectively untraceable secrecy jurisdictions.

Add to that, Australia is a 'place of choice' for money laundering due to lack of regulation, according to one of the biggest banks (ANZ).

AU Government Warned 3 Years Ago that this Would Happen

Around 3 years ago, the Australian government held a public enquiry into financial related crime. That means that it promised to accept submissions from the public - like me. So I spent a few hundred hours in doing my patriotic duty to share my knowledge - as probably the only expert in a specific type of financial crime in the whole country. 

As an expert, I accurately described what had been going on (a lot of money laundering) and what was certain to happen in the future (a lot more money laundering) unless certain steps were taken (which they weren't).

The main point was that severely criminal banks were operating in Australia - and this would force otherwise honest banks to either follow suit or minimally engage in extremely undesirable behaviours.

To me, this was obvious and irrefutable. Unfortunately, it seems that the logic of the key people was blocked when they "smelled" loss of political capital (donations, popularity, prestige, favours or who knows what, but surely we need a real inquiry to find out). 

Quotes from our submission 3 years ago:

Urgent Action Required to Protect Australia from Crime in Financial Institutions

This submission refers to a matter of ultimate seriousness – alleging high level corruption in government and criminal authorities which protected the operation of organized crime in Australia and the world’s financial system.

The Urgency of the Situation

Action is urgently required to protect honest banks from unfair competition from criminally subsidized banks which utterly distorts the risk/reward profile of the financial industry. Criminal penetration on such a scale obscures the boundary between criminal and legitimate corporations – and pressures otherwise honest banks to venture into high risk, illegitimate, reckless, illegal or even criminal activity, destabilizing the financial system and dragging it down into disrepute.

A New Normal

The new normal is that law abiding banks must now officially and openly co-exist with criminal banks. For years we have been warning Australian and international criminal, regulatory and government authorities that urgent action was needed or else there would be:

no clear demarcation between criminal and non-criminal corporations

This has now happened, but many law makers, regulators and judicial authorities are in denial about it, which is extremely dangerous.

Characteristics of this dangerous new bank typology

In order to define the typology and absolutely confirm its existence, this submission will focus on the criminal activity in the bank ............

Everyone Expressed a Big Surprise!!

The national news network (ABC) even published one report headed:
Even the Commonwealth Bank's staunchest critics wouldn't have predicted this one.

Well, we predicted it was a certainty - years ago, and worse might yet happen unless genuine action takes place. You can't suck money out of the legitimate economies at the current rate - and squirrel it away in secrecy jurisdictions, and fantasize that more debt will satisfy.

Will senior management at last be held to account?

Senior management says it was just a tiny error in computer code - with no cross-checks, balance sheets programmed for detecting suspicious transactions, or beneficial owners of assets, OR EVEN CASH DEPOSITS OF OVER $10,000 ...... 

So, senior management says they are not budging, not giving back bonuses, and they are certainly NOT going to make any (known) effort to identify victims or (horror) offer compensation (without torture by lawyers). Latest update is that the board will cut the execs' pay a little, but not by much & not close to being commensurate to the damage done.

This is exactly how modern criminal organizations work

No-one seems to realize that this is exactly how modern criminal organizations work.

If crime bosses can make fifty million by corrupting computer code, that is perfect for them. Their excuse script is already written - see above. Does that mean that this particular bank exec is necessarily a criminal? No - that is an entirely irrelevant question. Criminal organizations infiltrate banks, government and politics. It may not be easy to quickly identify the criminal source, certainly not from a few media reports. The point is exactly as we warned YEARS AGO:

A New Normal

The new normal is that law abiding banks must now officially and openly co-exist with criminal banks. For years we have been warning Australian and international criminal, regulatory and government authorities that urgent action was needed or else there would be:

no clear demarcation between criminal and non-criminal corporations

This has now happened, but many law makers, regulators and judicial authorities are in denial about it, which is extremely dangerous.

This was a massive crime with horribly trashed victims

Just to ensure that you know that this was a massive crime with likely horribly trashed victims, as yet unidentified, here is the concise statement of the prosecution filing for these crimes:

ACN 123 123 124
1.    In May 2012, the Respondent (CommBank) rolled out Intelligent Deposit Machines (IDMs), a type of ATM that accepts deposits by both cash and cheque. Deposits through an IDM are automatically counted and are credited instantly to the nominated recipient account. The funds are then available for immediate transfer to other accounts both domestically and internationally.
2.    IDMs can accept up to 200 notes per deposit, that is, up to $20,000 per cash transaction. CommBank does not limit the number of IDM transactions a customer can make a day.
3.    IDMs facilitate anonymous cash deposits. In order to make a deposit through an IDM, a card must be entered to activate the machine. The card can be from any financial institution, however, deposits can only be made into CommBank accounts. If the card entered into the machine was not issued by CommBank, the cardholder details are not known to CommBank. Nor are banks obliged to collect or report depositor details for threshold transaction reports (TTRs) for deposits made through an IDM.
4.    There has been significant growth in the use of CommBank IDMs since their roll out. In the 6 months from June 2012 to November 2012 about $89.1 million in cash was deposited through this channel. In the 6 months from January 2016 to June 2016 cash deposits through this channel grew to about $5.81 billion. In May and June 2016 over $1 billion in cash was deposited each month through CommBank IDMs.
Failure to comply with its AML/CTF Program
5.    CommBank has a Joint Anti-Money Laundering and Counter-Terrorism Financing Program, which is divided into Part A and Part B, as required by s 81 of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (the Act). Section 2 of CommBank's Part A program contains procedures for managing the risks reasonably faced that the provision of designated services may facilitate money Iaundering or financing of terrorism (MUTE risk) which were included to comply with Part 9.1 cf the Anti-Money Laundering and Counter-Terrorism Financing Rules instrument 2007 (No. 1) (the Rules). ComrnBank has not complied with a number of these procedures on and from May 2012.
6.    Prior to rolling out 1DMs, CommBank did not carry out an ML/TF risk assessment. CommBank did not carry out an ML/TF risk assessment in response to the exponential rise in cash deposits through IDMs, nor in response to alerts raised by internal transaction monitoring systems, nor did it review its ML/TF risk assessment in response to identification by law enforcement of significant instances of money laundering through IDMS. CommBank did not take any steps to assess the ML/TF risks posed by IDMs until mid-2015, 3 years after they were introduced. About $8.91 billion in cash was deposited through CommBank IDMs before it conducted any assessment of the ML/TF risks associated with the IDM channel.
7.    CommBank has not introduced appropriate risk-based systems and controls to mitigate and manage the higher ML/TF risks it reasonably faces by providing designated services through IDMs, contrary to Section 2 of the Part A program.
8.    CommBank's Part A program includes a transaction monitoring program that was included to comply with Rules 15.4, 15.5, 15.6 and 15.7. At various times between about 20 October 2012 to 27 September 2016 CommBank did not comply with the requirements of its transaction monitoring program with respect to 778,370 accounts. None of these accounts were subject to transaction monitoring at the "account level", at various times, and some were not subject to "customer level" transaction monitoring.
Late TTRs
9.    CommBank is required to report to AUSTRAC any "threshold transaction" (being a transaction involving the transfer of physical currency in the amount of $10,000 or more) within '10 business days after the transaction occurs.
10.    CommBank failed to give 53,508 TTRs to AUSTRAC on time for cash transactions of $10,000 or more that were processed through IDMS from 5 November 2012 to 1 September 2015 (the Late TTRs). The Late TTRs represent about 95% of threshold transactions that occurred through IDMs in that period and have a total value of $624.7 million. 1,640 of the Late TTRs (totalling about $17.3 million) related to transactions connected with money laundering syndicates being investigated and prosecuted by the Australian Federal Police (AFP) or accounts connected with those investigations. A further 6 of the Late TTRs related to 5 customers who had been assessed by CommBank as posing a potential risk of terrorism or terrorism financing. Two of the Late TTRs were lodged with AUSTRAG on 24 August 2015 and the remaining 53,504 were lodged with AUSTRAG on 24 September 2015.
Failure to file SMRs and to carry out ongoing due diligence
11.    Suspected money laundering was conducted through CommBank accounts, by way of cash deposits, many through IDMs, followed immediately by international and domestic transfers. Many of the cash deposits were 'structured' by customers: that is, deposited in amounts just under the threshold transaction limit to avoid triggering CommBank's obligation to give a TTR to AUSTRAL Structuring is an offence under s 142 of the Act.
12.    Despite Identifying the pattern of activity on these accounts as suspicious and indicative of money laundering, CommBank repeatedly failed to comply with its obligations to give a suspicious matter report (SMR) to AUSTRAC either at all or within the time required by s 41 of the Act. In part, this was because CommBank adopted a policy not to submit SMRs if the same type of suspicious behaviour had been reported any time within 3 months prior. In other cases, SMRs were not reported because no transaction monitoring alert had been raised, alerts had not been reviewed, or, where alerts had been raised and reviewed, CommBank only partially reported its suspicions. CommBank also failed to lodge SMRs because notifications by law enforcement of unlawful activity were ignored,
13, Section 36 of the Act requires CommBank to monitor its customers with a view to identifying, mitigating and managing ML/TF risk. CommBank failed to do this, including because in some instances, no transaction monitoring alerts were raised for suspicious activity, and, when alerts were raised, they were not reviewed in a timely manner having regard to ML/TF risk (in many instances, alerts were not reviewed for months after they were raised). In many cases, the accounts the subject of money laundering were not being monitored at all.
14, Even after suspected money laundering or structuring on CommBank accounts had been brought to CommBank's attention (by law enforcement or through internal analysis), CommBank did not monitor its customers with a view to mitigating and managing ML/TF risk, including the ongoing ML/TF risks of doing business with these customers. Rather, once suspected money laundering or structuring had been identified on these accounts, CommBank often looked no further than whether or not to submit an SMR. The Rules require mandatory enhanced customer due diligence (ECDD) where a s 41 suspicion is formed. CommBank did not carry out any ECDD on these accounts (such as identifying the source of the customer's wealth or terminating accounts) either at all or until after several SMRs had been raised. When CommBank terminated accounts, customers were generally given 30 days' notice. Suspicious transactions were allowed to, and did, continue during the notice period on some of these accounts.
Money laundering Syndicate No 1
15.    From late 2014 to August 2015, approximately $20.59 million was deposited, mostly in structured cash deposits, through CommBank IDMs into 30 CommBank accounts, 29 of which were in fake names. Shortly after each deposit, the money was transferred internationally. Approximately $20.56 million was transferred offshore, Two individuals have been convicted of dealing with proceeds of crime and structuring offences in relation to this activity.
16.    By April 2015, CommBank had identified repeated, suspicious and connected patterns of structured cash deposits followed by international money transfers on 16 of these accounts (15 of which were in fake names). Notwithstanding this suspicion, between April and 1 July 2015, CommBank permitted approximately $9.1 million to be transferred from these`accounts to Hong Kong.
17.    The AFP requested CommBank prevent withdrawals and transfers on these accounts on 1 July 2015. By that time, CommBank had identified a particular methodology for these accounts - they were opened by certain foreign nationals on holiday visas and deposits through IDMs were made Involving blatant structuring, followed by transfers offshore almost immediately thereafter.
18.    Between 1 July 2015 and 24 August 2015, the same syndicate laundered approximately $4.78 million using 11 further accounts opened in fake names. Those accounts used the same methodology previously identified by CommBank and yet were not appropriately monitored having regard to the ML/TF risks and were not always the subject of SMRs that complied with s 41.
19.    60 of the Late TTRs recorded transactions of this syndicate, with a value of $629,200. On 92 occasions CommBank failed to report suspicions relating to this syndicate, either at all or on time as required by s 41, involving transactions totalling approximately $22.7 million.
Money laundering Syndicate No 2
20.    Between June 2014 and January 2015, 3 individuals deposited $2,272,435 in cash into 3 respective CommBank accounts (largely through lDMs), Almost immediately after each deposit, the money was transferred domestically, including to money remitters. By July 2014, CommBank was aware of unusual patterns of transactions on 1 of these accounts and had identified a number of deposits which were structured. By October 2014, CommBank was aware of suspicious transactions on the second of these accounts, and by November 2014, CommBank was aware of suspicious transactions on the third account. However, CommBank continued to allow these Individuals to transact on these accounts until they were each arrested on 19 January 2015. These 3 individuals have been charged with dealing in proceeds of crime, in connection with a drug importation syndicate, with 1 of these individuals already having been convicted.
21.    Between March 2014 and November 2015, a further $4.053 million was deposited, in cash, into 9 other CommBank accounts, followed by domestic transfers to accounts which had previously received funds from the three individuals. Even after CommBank identified structuring on the deposits, and identified some of these accounts as belonging to suspicious money remitters or being part of a sophisticated money laundering syndicate, CommBank allowed transactions to continue.
22.    178 of the Late TTRs recorded transactions involving this syndicate or related third party accounts, with a value of $1,780,030. On 18 occasions CommBank failed to report suspicions relating to this syndicate or related third party accounts, either at all or on time as required by s 41, involving transactions totalling approximately $5.73 million.
Money laundering Syndicate No 3
23.    From November 2014 to August 2015, cash deposits totalling $27.2 million were made to one CommBank account. Almost immediately after each deposit, the money was transferred internationally. $26.47 million was transferred to offshore accounts. The deposits were the proceeds of a drug manufacture and importation syndicate. Three individuals have been charged with dealing in proceeds of crime, with 1 of these individuals already having been convicted.
24.    Despite cash deposits under $10,000 being made into this account, no transaction monitoring alerts for structuring were ever raised. Very large cash deposits, up to $532,500, were also regularly being made at branches. Some alerts were raised for these large deposits, but were not reviewed in a timely manner, having regard to the MLITF risks. By no later than 28 April 2015, CommBank considered the account to be high risk and suspicious. By this time, $14.7 million had already been sent offshore. However, CommBank did not monitor this customer having regard to the MLITF risks and permitted the highly suspicious activity to continue, with $12.2 million in cash deposits received and $11.8 million remitted overseas after 28 April 2015. Although the pattern of structured deposits, large cash deposits and international transfers occurred almost daily, an SMR was only lodged around every 3 months or so for this account.
25.    514 of the Late TTRs recorded transactions into this CommBank account or into the account of related persons, with a value of $5,435,860. On 3 occasions CommBank failed to report suspicions relating to this syndicate, either at all or on time as required by s 41, involving transactions totalling approximately $10.1 million,
Money laundering Syndicate No 4
26.    Between February 2015 and May 2016, over $21 million was deposited in cash into 11 CommBank accounts. These deposits were the illicit proceeds of a drug importation and distribution syndicate. More than half of the deposits occurred through IDMs. Shortly after each deposit, the money was transferred to other domestic accounts. Transfers were made across a number of these accounts to the same recipients, some of which were known as early as May 2015 to CommBank to be suspicious entities, including accounts connected to Syndicate No 2.
27.    A number of transactions on these accounts were not the subject of any transaction monitoring alerts, in spite of large and structured cash deposits being made. However, by mid-2015, CommBank was aware of unusual patterns of transactions and suspected structuring of cash deposits on 4 of the accounts. CommBank became aware of unusual and suspicious transactions on the remaining accounts later in 2015. CommBank also identified a connection between suspicious activity on a number of these accounts. Despite these matters, CommBank did not monitor these customers having regard to the ML/TF risks, and permitted transactions to continue on these accounts.
28.    The AFP advised CommBank in late 2015 that a number of these accounts were connected with an investigation into serious criminal offences including 'drug importation and unlawful processing of money'. CommBank permitted several of the accounts to remain open even after this time and further transactions occurred. Eight individuals have been charged with dealing in proceeds of crime, with 6 of these individuals already having been convicted.
29.    888 of the Late TTRs record transactions on these accounts and a related party's account, with a value of $9,462,095. On 27 occasions CommBank failed to report suspicions relating to this syndicate, either at all or on time as required by s 41, involving transactions totalling approximately $34.3 million.
Cuckoo smurfing syndicate — Strike Force A
30.    CommBank accounts were used for "cuckoo smurfing", a form of money laundering which involves transfers of money between associates within separate countries in such a way that obviates the need for money to cross international borders.
31, In May 2015, 2 individuals were arrested and charged with money laundering and structuring offences, which were allegedly committed by structured cash deposits made into a number of CommBank accounts, as part of a "cuckoo smurfing" syndicate. NSW Police alleged that some $1.784 million was laundered through 99 CommBank accounts between 7 October 2014 and 21 May 2015 (Strike Force Al). NSW Police first advised CommBank that it was investigating money laundering and structuring on these accounts on 26 May 2015.
32. Between 24 October 2011 and 18 June 2016, 902 cash deposits under $10,000, totalling $7.2 million, were deposited into 12 CommBank accounts —10 of these accounts being Strike Force Al accounts and a further two accounts related to Strike Force Al accounts. On 20 occasions, CommBank failed to report $2,311,902 in cash deposits to 11 of these 12 accounts that it suspected were structured, contrary to s 41. CommBank failed to monitor these customers with a view to identifying, mitigating and managing ML/TF risk.
33. In January 2015, another individual was arrested and charged with money laundering and structuring offences, which were allegedly committed by structured cash deposits made into a number of CommBank accounts, as part of a cuckoo smurfing syndicate. NSW Police alleged that some $273,432 was laundered through 39 CommBank accounts between 10 October 2014 and 19 January 2015 (Strike Force A2). NSW Police advised CommBank that it was investigating money laundering and structuring on these accounts on 20 March 2015.
34. Between 31 January 2012 and 18 April 2016, 276 cash deposits under $10,000 totalling $1.7 million, were deposited into 6 of the Strike Force A2 accounts. On 20 March 2015 NSW Police advised CommBank that it believed these 6 accounts had been specifically generated for the purposes of money laundering. On 11 occasions, CommBank failed to report $1,250,534 in cash deposits to 5 of these accounts that it suspected were structured, contrary to s 41. CommBank failed to monitor these customers with a view to identifying, mitigating and managing MLITF risk.
Additional suspicious matters involving structuring, IDMs and unlawful activity Unregistered remittance business
35. Having identified patterns of suspicious cash deposits into IDMS, in mid-2015 CommBank carried out a review of all customers that made 3 or more ATM cash deposits over $5,000 since 1 January 2015. This review resulted in CommBank suspecting a number of customers as being linked to unlawful activity. CommBank failed to report its suspicions with respect to 1 of these customers who was suspected of running an unregistered remittance service.
36. CommBank had previously failed to report suspicions with respect to this customer. Between 25 June 2014 and 14 July 2014, 85 cash deposits, both large and structured, at branches and through IDMs and totalling $491,724, were made into this CommBank account. CommBank failed to report its suspicions in relation to this customer and the $491,724 in third party cash deposits, contravening s 41 on 2 occasions. CommBank failed to monitor this customer with a view to identifying, mitigating and managing MLITF risk.
January 2017 IDM deposits
37. Over 5 days In January 2017, CommBank accepted cash deposits totalling $320,000 through IDMS into a single bank account. CommBank failed to submit an SMR to AUSTRAC reporting its suspicions in relation to both large and structured cash deposits, and reported suspicious third party transfers into this account late.
38. The Applicant seeks the following relief from the Court:
a.    Declaratory relief under s 21 of the Federal Court of Australia Act 1976 (Cth);
b.    Orders for civil pecuniary penalties under s 175 of the Act; and
c.    Costs.
39. By failing to comply with its Part A Program, CommBank has contravened s 82 of the Act on 9 occasions.
40.    By failing to file the Late TTRs within the time required, CommBank contravened section 43 on 53,506 occasions.
41.    CommBank has contravened s 41 of the Act on each of the 174 occasions that it failed to file an SMR on time, or at all, in relation to the money laundering and cuckoo smurting syndicate accounts, and other accounts the subject of structured and large cash deposits, where it had formed a suspicion that it held information that may be relevant to the investigation or prosecution of an offence, including identity fraud.
42.    Having identified suspicious activity on accounts the subject of structured and large cash deposits, CommBank failed to monitor customers in relation to the provision of designated services with a view to mitigating and managing the MUTF risk reasonably faced. In some instances due to the lack of transaction monitoring alerts or the timely review of those alerts, CommBank failed to monitor customers in relation to the provision of designated services with a view to identifying, mitigating and managing the MUTE' risks reasonably faced. CommBank's conduct in respect of 71 of these customers is in breach of s 36.
43.    As a result of the failure to file TTRs and SMRs on time or at all, in accordance with the Act, AUSTRAC and other law enforcement and designated agencies have been deprived of information which the Act is intended to provide. Non-reporting and late reporting both delays and hinders law enforcement efforts. Delays in this case have resulted in lost intelligence and evidence (including CCTV footage), further money laundering and lost proceeds of crime.
44.    It is essential to the integrity of the Australian financial system that a major bank such as CommBank has compliant and appropriate risk-based systems and controls in place to deter money laundering and terrorism financing. The effect of CommBank's conduct in this matter has exposed the Australian community to serious and ongoing financial crime.
Date: 3 August

Psychopaths Destroy Democracy

  Uploaded - Thursday, July 27, 2017

Cartoon credit: Gary Markstein 
Why this cartoon? It shows how a successful psychopath might be working. The art of the skilled psychopath is to manipulate so "victims" don't know that they are being manipulated, e.g. through the projection of false masks or distracting "realities". High functioning psychopaths are up to 20% of corporate managers, a similar proportion of low functioning psychopaths are in prison populations. Politicians often rate high on this scale.

Psychopaths are Destroying Democracy

Psychopathy is generally regarded as incurable. Modern research suggests it is caused when the empathy circuits do not develop by age 4 - after that it is too late because they depend on the organic presence of properly organized von Economo (spindle) neurons (VENs).

VEN's are quite rare and only exist in species that form complex groups, like humans, dolphins or mountain gorillas (pictured below). Dementia patients have had their VEN's badly damaged (but their surrounding brain cells are largely unaffected).

So it is useless to argue with a psychopath or to try to make them see reason. They understand power and potentially can be controlled in good strong communities by insisting on honesty, transparency and structured decision making.

The US destroyer Fitzgerald has officially been blamed for its collision with a Japanese cargo ship ACX Crystal. There was simply no-one on lookout in a busy sea lane and the captain didn't know. (The US refused to cooperate with the investigation.)

Likewise, so much is distracting the free press that no-one is really on watch - doing the hard analytical work.

Psychopaths lack the empathy possessed by these mountain gorillas, or the ability to truly participate in complex groups, as higher animals do.

Because they don't really participate, they are comfortable with looting a country's assets, emptying them into a tax haven and letting people die from lack of hospitals, schools, food and so on.

High functioning psychopaths are out of control

They damage democracy, business, financial institutions, jobs, children, education, nurses, doctors, the church, charities - and everyone suffers.

Once the pattern is recognized, and you give up any knee-jerk wish for an instant cure, there is a genuine cure which must be applied. Reasoning with psychopaths empowers them and weakens you - all it does is tell them your strategy.

Psychopaths understand power and can be controlled in good strong communities by insisting on honesty, transparency and structured decision making.

It is painstaking, very annoying, unglamorous - but it is the only cure, and it works.

It is necessary to accumulate the facts hidden by the psychopath for a confrontation which will bring back sanity.

It is like a jigsaw that lacks power or cohesion until the vital piece is found. A vital piece became public last week, but no media published its significance. Democracy is sick. There is a cure but not an instant one.

Media Asleep on the Watch

Ask your editor and email me if interested: Your media has missed one of the most important stories of the year, briefly described here. The WSJ and WaPo didn't even mention it. Reuters "mentioned" it and the NYT copied the "mention" - but they had no clue. Bloomberg & Law 360 did a tiny bit more with a little help from their friends (including yours truly). No media outlet saw the significance.

Critical Case Missed

Last Wednesday, the DOJ achieved its 5th Credit Suisse criminal conviction making 6 official events in the series starting with the Senate Hearings in February 2014. No single event gave the whole picture. All 6 events need to be understood and analysed. The contradictions, lies, massive and monstrous crime - all dressed up to look respectable.

The psychopath ONLY understands power - what we hold dear and of immense value means nothing to them.  

CS Conviction: Un-Prosecutable Crimes

  Uploaded - Saturday, July 22, 2017

Cartoon credit to LAT's David Horsey for brilliant artistic insight in the best CA tradition. For complete image, see background.
Lies, plain and simple

Wednesday's Criminal Conviction:
Stunning Details of Credit Suisse's Crimes

The East Virginia Federal Court and DOJ have just released damming insight into how criminal bank Credit Suisse intimidated its staff into committing deep crime, and then "threw them under a bus" if they were caught. Susanne Ruegg Meier pleaded guilty for her crimes as a senior manager at Credit Suisse Zurich, but she revealed stunning detail of:

how the bank tried to create "un-prosecutable" crime

Staff were dumped like disposable "single-use" objects. This was the 4th criminal conviction of the bank's "conscientious and dedicated employees". It completes the pattern established by the three earlier convictions of Andreas Bachmann, Josef Dörig and Michele Bergantino. The case is: U.S. v. Adami, 11-cr-00095.

Not a once-off, but a system template

The tragedy is that the bank is trying to get away with the fiction that this criminal conspiracy was restricted to tax fraud - rather than a practised system of criminal profiteering. The DOJ is an accomplice - I can testify to that from hard personal experience.

So what if the government received $8 billion in penalties, if the true damage - private and public - was many multiples of this.

Most of the time, the government "looked the other way" while bank crime ruined millions. 

The few cases that made it to court met the bank's army of lawyers, and were hobbled from the start, because:

criminal investigation powers and resources are needed to get the evidence hidden inside lying banks

Being caught was the crime

Susanne Meier was discarded and abused with the label "Bank Rogue" - not because she committed crimes - for that was management policy - but because she was caught. Meier said that she understood that the bank's Legal and Compliance Department were not even interested in actions which were criminal under US or other foreign law.

Court documents are clear that management intimidated these people so that they had no choice if they wanted to keep their jobs. Bachmann was told by management: "Mr. Bachmann: You know what we expect of you — don't get caught." He called it a massive conspiracy.

Meier completed the picture of bank management crime

However, Bachmann's most damming sworn evidence in his statement of facts was the bank management's scheme to move its dirtiest crime outside the bank:

14. Credit Suisse wholly owned a Subsidiary which originally employed Dörig as part of its senior management. In approximately 1997, a representative of Credit Suisse informed employees of Subsidiary that it was too risky for Credit Suisse to have Dörig form and manage nominee tax haven entities for U.S. customers from within Credit Suisse. Instead, Credit Suisse announced that the formation and management of nominee tax havens should be done from outside Credit Suisse. Credit Suisse instructed Dörig to form his own company that specialized in the formation and management of nominee tax haven entities.

Meir's statement of facts showed how these so-called "external entities" were in fact nothing of the sort. Meier detailed how:

Dorig's so-called "external tax haven entities" were treated in practice as if they were internal sections of the bank.

Bank immunity through 3rd parties loses credibility

For decades, banks and other criminal entities have insulated themselves from criminal and civil liability by acting in proxy through third parties.

SCOTUS even went so far as to institionalize such protection of crime through Stoneridge and Morrison.

However, in the case of Credit Suisse and Dorig's shell companies, the claim for 3rd party status for its proxies should not be recognized by a court.

Both the employees and Dorig's shell companies are acting as non-independent proxies.

For a 3rd party to protect the "instigator", it has to be an independent entity, but in this case:

The "3rd party" was an instrument of the bank, and not able to act independently.

Criminal banks typically prefer to structure suspicious transactions between “multi-jurisdictional compartmentalised entities” where document ownership is quarantined amongst a number of its wholly-owned entities across multiple jurisdictions and languages.

So the customer/victim does not have ownership rights of the documents he needs to prove damage (according to the “bank’s legal doctrine”).

Under civil law, most judges (who may have been inappropriately “politically appointed”) are reluctant to overrule this principle and may use the doctrines of comity and “Forum non conveniens” to evade the tricky legal questions which the bank would otherwise be likely to press.

The result: the bank can commit horrendous crimes and no-one will touch it. Victims who try to fight this system only lose possibly huge legal fees on top of the original damage. Lazy judges take the easy way out, like nearly everyone else who has the responsibility, power and authority to genuinely help bank crime victims. The result has the superficial resemblance to "due process" while concealing sadistic cruelty and injustice towards the innocent. Propagandists spew that the bank was innocent and committed no crimes.

This has been the template for countless billions of dollars of crime, much of hitting "mums and dads" who are still waiting for the tiniest amount of compensation, or the smallest suggestion of an apology.

Damming indictment of bank executives

Bank CEO Brady Dougan blamed bank rogues for its massive criminal conspiracies. He defended the managers as being deceived by the rogues. When confronted by the criminal travel practices which were described by Meier, he said it was all the fault of the rogues, not their managers. His dubious sworn testimony was recorded.

The main points are shown in this 9 minute video.

What is a Bank Rogue? from Paul Morjanoff on Vimeo.

The documents shown in the video are the same type as referred to in Meier's testimony. To me, it is obvious that CEO Dougan was committing perjury. He emphasized that management did not know about the tax fraud conspiracy, but the evidence and even his own facial expressions, indicate otherwise.

Censorship: Wall Street Journal declined to report Meier's conviction!

The Wall Street Journal (WSJ)  has so far declined to publish any mention of Meier's conviction. This conceals from investors the truly evil management constructions used by the bank to intimidate staff - so that they would commit the crimes which boosted executive bonuses.

As a business journal, the WSJ certainly would have been notified of it in their news feeds on Wednesday, but there must have been a decision to ignore the story.

Reuters mentioned Meier's conviction but gave little detail (they hadn't read the statement of facts).

The NYT reprinted Reuters inadequate coverage (cheap?) The NYT ought to promote themselves as an uncensored "Fair, balanced and reliable" source of business news, instead of misleading investors with "half-truths".

The only prize goes to David Voreacos at Bloomberg who did report some of the more important details from the statement of facts.

However, this blog is the only place you will read all the important details without getting the documents yourself through PACER.

Extraordinary statement of facts

These extracts from the extraordinary statement of facts have not been published anywhere else (except for a few by Bloomberg  and Law360 subscription outlets):

9. ……. Upper management imposed goals on Markus Walder, who pressured Rüegg Meier to achieve the performance goals for accounts which she personally managed, as well as for the North American desk, and if she was unable to do so with her current client base, then either to find new clients or to obtain new assets under management from existing clients. 
18. ….. Walder emphasized to Rüegg Meier that it was her responsibility to meet Credit Suisse's performance goals, regardless of the Credits Suisse internal directive, and that Rüegg Meier had to do whatever it took in order to meet those goals.
21. …… Credit Suisse provided relationship managers the option to obtain "travel" account statements that bore no logo and were devoid of either account or customer identification information.  ……
22. Credit Suisse provided Rüegg Meier and other travelers with business cards that carried no logo for them to use when traveling to the United States. The cards had only the travelers' names, an alternative street address for Credit Suisse, that is a street address for the rear entrance to the office where the Defendant actually worked, and office numbers. Ruegg Meier understood that Credit Suisse provided her with logo-less business cards in order to assist her in concealing the nature and purpose of her business.
29. …. On numerous occasions, Dörig submitted false Forms W-8BEN to Credit Suisse through Ruegg Meier, Bergantino and other relationship managers. The Forms W-8BEN that Dörig provided to Credit Suisse falsely represented that the nominee tax haven entity, or structure, was the beneficial owner of the assets in the undeclared account, and not the actual owner, the U.S. customer.
30. U.S. clients used the structures to create the appearance that the account assets were owned by the structures and controlled by independent fiduciaries, such as Dörig, and that the U.S. clients had no ownership interests in the assets. However, the U.S. clients, the relationship managers and the fiduciaries all treated the accounts as though they were really controlled by the clients. For example, only fiduciaries, like Dörig, had written authority to direct activities in the accounts. Nevertheless, the Defendant routinely met with the U.S. clients and took instructions from them, and later sought a written order from Dörig to ratify the instructions and to make it appear as though that Dörig had issued the instructions.
31b. Rüegg Meier assisted a few U.S. customers to conceal their undeclared accounts by facilitating withdrawals of large quantities of cash from Credit Suisse in Zurich. For example, … Ruegg Meier assisted the customer in closing the account by withdrawing approximately $1 million in cash. … to find another bank simply by walking along Bahnhofstrasse in Zurich …. The customer placed the cash into a paper bag and exited the bank.
32.  ….  However, to the best of Ruegg Meier's knowledge, none of her subordinates or other co-workers were ultimately disciplined or suffered adverse employment consequences for violating U.S. law and Credit Suisse policy by providing investment advice in the United States. Indeed, Ruegg Meier and other relationship managers deemed providing investment advice in the United States essential to retaining clients.
33. Just as he had pressured Ruegg Meier and others on the North American desk to travel to the United States in order to meet sales goals, Walder expected bankers to call into the United States and to attempt to make sales in the United States even though they were explicitly prohibited by U.S. law and Credit Suisse policies from doing so. …

Chris Wray - v - the People

  Uploaded - Saturday, June 10, 2017

Bank Crime Kills Innocent People
Chris Wray - v - the People

A Million Lives Lost
The Great Recession of 2008 was responsible for around half a million cancer deaths plus many others from suicide, heart attack, stroke, stress induced disease and more from other causes. There were over 20 million job losses
The illegal spying program, Stellar Wind and the corrupt firing of 11 US Attorneys which followed it are not known to have saved lives.
If the program had been legally compliant, it could have been useful and might have saved lives.

However, bank crime was protected.

Source data:
Effects of the Great Recession
Financial crisis caused 500,000 extra cancer deaths, according to Lancet study
Great Recession Linked To 10,000 Suicides

The World Chris Wray would Walk into as FBI Director

This article shows how the White House dumbed itself down through corruption.
It was blind to losing half a million lives from sabotage of the financial system.

Chris Wray has been nominated to take the place of FBI director James Comey, who stood up to President Bush.

Comey emphatically insisted that "
intelligence under the law is the only sustainable intelligence in this country". 

Both Wray and Comey joined - and left - the spying program at about the same time. 

Comey won one battle but lost the war while his junior, Wray was watching and learning the system.

If Comey had been able to read this article about his future, then, history would be different and many of those half million people would likely not have died.

We hope and pray that Wray does read this article, because our purpose is for him to create the epithet: Chris Wray - And - the People

Chris Wray and James Comey - v - Stellar Wind

Chris Wray and fired FBI director James Comey both joined the tiny exclusive group that even knew of the existence of the Bush administration's secret illegal wire-tapping and electronic surveillance program called Stellar Wind, at around the same time.

Stellar Wind was the code name used to protect the secrecy of the existence of the President's Surveillance Program (PSP). 

Title III of the Foreign Intelligence Surveillance Act Amendments Act of 2008 required regular comprehensive reviews of the Program. These regulations were enacted following Watergate to prevent the White House from abusing its power, e.g. allowing criminal entities (like criminal banks) to damage the financial and political systems, e.g. just to vacuum trillions of dollars out of the economy into secrecy jurisdictions. This would, of course, leave state, service and infrastructure systems so impoverished that they would be forced sell themselves, just to exist. 

Many claim this is just what happened.
It is beyond doubt that it has happened to some very tragic degree.

Stellar Wind was a Criminal Monstrosity

The head of the Office of Legal Counsel (OLC), Jack Goldsmith examined Stellar Wind and concluded it: “was the biggest legal mess I’d seen in my life.” His team believed it had clearly included at least two criminal felony violations.

James Comey was blunt: he couldn’t find a legal basis for the program. “The analysis is flawed — in fact, fatally flawed. No lawyer reading that could reasonably rely on it”.

Stellar Wind had to be re-authorized every 45 days and both Attorney General Ashcroft and Comey refused to do this. Ashcroft suddenly became ill and was near death in hospital. His wife, Janet gave strict orders that no-one could see him. President Bush phoned, over-ruled Janet and arranged for Andy Card and Alberto Gonzales to see Ashcroft - to pressure him to sign the authorization. 

Janet called Ashcroft’s chief of staff, to warn him - and he called Comey, who at that moment was driving home. Comey ordered his driver to the hospital; they drove “Code 3” all the way— lights flashing, siren wailing, engine revving. It was the night of March 10, 2004. He had ordered his men (FBI agents at the hospital) to protect Ashcroft, meaning to use force if required against the Secret Service agents coming with Gonzales.

Comey arrived at Ashcroft's bed minutes before Gonzales. The drugged Ashcroft told Golzales he couldn't sign it, blaming the White House for depriving him of the necessary resources. Jack Goldsmith said later that it was such an amazing scene he thought Ashcroft would die on the spot.

Not to be outdone, on March 11, 2004, President Bush arranged for Gonzales to (illegitimately) sign a new type of authorization. He claimed the role of "Commander in Chief" as being above the law - and over-riding the Watergate inspired protection. Comey, Ashcroft and FBI directer Mueller knew this was fake and dangerous in the extreme - and prepared to resign. They had sworn to uphold the constitution and refused to be part of something so sinister.

They had thought that this was the end of their careers, but valued something far higher which they would not betray.

Ashcroft was too sick to resign then and asked the others to wait a few days until he was stronger. In those few days, word got out and around 30 top DOJ and FBI execs joined in. 

Chris Wray, then assistant attorney general in charge of the Criminal Division, stopped Comey to say, “Look, I don’t know what’s going on, but before you guys all pull the rip cords, please give me a heads-up so I can jump with you.

By the time Comey finally made it to the White House, word was out that an uprising of epic proportions was under way.

How was the Criminal Monstrosity Created?

Manipulators often use a cynical trick: hire someone incompetent, isolate them, starve them of resources, make it impractical for them to speak out, then "coach" them to produce the outcome you want, regardless of its illegality. The poor victim takes responsibility, and is fired, jailed or called a "lone rogue" if things go bad. The poor victim might be doing his honest best in impossible circumstances and screams "injustice" when he is scapegoated. But, of course, that is exactly the purpose of a scapegoat. Top dog goes free, or maybe is labelled a "hero" with a "huge bonus".

Bush and Gonzalez chose OLC Deputy Assistant Attorney General John Yoo to write the first series of legal memorandums supporting the Stellar Wind. Yoo was the only OLC official permitted access to the program from inception until he left the DoJ in May 2003. He later said much of it was outside his area of competence and that he was not well versed in criminal law.

Later, Patrick Rowan, a senior counsel in the Criminal Division, was read into Stellar Wind with his supervisor, Christopher Wray. Wray reported that after his and Rowan's read-in, they "were kind of left on our own." He said that no one directed him or Rowan or tell them to develop any judgements or opinions on the subject. Rowan reported it was very difficult to work on the matter because of the secrecy surrounding the program and other demands of his job: “Because there were no additional attorneys within the Criminal Division who were read into the program (and very few in the Department generally), we have been unable to assign work to others or to fully consult with others within the Division.”

Charlie Savage at the NYT made a FOIA request to get the OIG (Office of Inspector General) report on Stellar Wind declassified. The first major version in April 2015 was heavily redacted by the DOJ. He appealed and in September 2015 a court authorized a less redacted version. (Earlier versions had been released by Wikileaks and the Government).

I studied the differences between the two major versions to find reasons for the heavy redaction, much of which looked unnecessary. This led me to believe that much of the redaction was a "cover-up" for embarrassing content - like: laziness, incompetence, corruption or a criminal intent to pervert the system for illegitimate gain.

For example, the following section appears in the September 2015 version, but was redacted in the April 2015 version. There was no security related content, but it shows embarrassing content. Management was simply not trying to comply with the law, but only creating an ineffective facade. Government money was being wasted to appease the need for appearances, while concealing an illegitimate intent:

Wray also told us that there was no organized Departmental effort to establish formal procedures for reviewing international terrorism prosecutions to comply with Rule 16 disclosure requests and Brady obligations. He said "the thinking was" that the Rowan memorandum was the "first step" toward devising "some kind of systematized process" for such reviews. However, we found no indication that OLC followed up on Rowan's request to further study these discovery issues with any kind of written product.
(Editor Note: Brady obligations refer to pretrial discovery while Rule 16 refers to Pretrial Conferences)

A more serious example is the justification used by President Bush to get the program re-authorized without Comey or Ashcroft. Again, this is only shown in the September 2015 version released by the court. The DOJ redacted this content in its April 2015 version, but there was no security content which would justify the redaction, which is shown here in italics:

A. The first significant difference between the March 11, 2004, Presidential Authorization and prior Authorizations was the President's explicit, assertion that the exercise of his Article II Commander-in-Chief authority "displace[s]the provisions of law, including the Foreign Intelligence Surveillance Act and chapter 119 of Title 18 of the United States Code (including 18 U.S.C. §2511(f) relating to exclusive means), to the extent of any conflict between the provisions and such exercises under Article 111.]"

President Bush decreed that he can "displace[s]the provisions of law".

Above the law - and done in secret so that nobody knows. 

How was the Criminal Monstrosity Justified?

John Yoo wrote the first series of legal memorandums justifying Stellar Wind. He was isolated, deprived of resources and writing about things for which he was unqualified. We speculate he may have been coached or intimidated, because no reasonable lawyer would have written what he wrote. This was the emphatic opinion of James Comey, Jack Goldsmith, John Ashcroft and FBI Director Bob Mueller - whose opinions in this matter are more reliable than those of Yoo. 

Yoo "justified" the Stellar Wind program by the President's Commander-in-Chief authority under Article II of the Constitution during wartime. But there was no war.

The new authorization was also justified using the President's wartime powers, based on Yoo's memorandums. It was almost instantly created - within a day. This was despite the fact that Yoo had left long before Comey arrived and nearly a year before the confrontation in March 2004.

Gonzales' incredible speed ("Speedy Gonzales") at producing the "wartime" excuse for illegally continuing the criminal surveillance of private people strongly suggests that he was an author of the original fake justification - not Yoo. We speculate that Yoo was coached to regurgitate the specious wartime fake argument and a far more credible scenario is as follows:
  • Extreme secrecy meant it would be very unlikely to ever be exposed.
  • Charlie Savage had to go to extreme lengths to get it released & even then it was so buried in detail he missed it.
  • Yoo would be sent to prison if he "blew the whistle" on this criminal manipulation.
  • It was based on the near universal principal that whistle-blowers are jailed or killed while the real criminals are "public heroes" for "pretending to save lives"
  • Stella Wind never saved even a single life, suggesting that its real motivation was otherwise.
  • The real motivation was more likely to allow criminal surveillance of criminal bank opponents. See HSBC corruption below.
What was the Intent of the Criminal Monstrosity?

In our opinion, there was mixed intent. Following 9/11 there was a need for better intelligence on terrorist threats.

It looks like a legitimate justification was used for corrupt purposes.

Soon after Comey's confrontation with the White House, an even more sinister scheme was conceived.

The White House had lost the first battle with the DOJ - so how could they make certain that they would never lose any more?

The plan: promote Gonzales to Attorney General, and stack the DOJ with "loyal Bushies", i.e. sycophants who would not dare to throw a "Comey".

Comey was simply upholding the US Constitution. Bush wanted to act illegally and unconstitutionally - so Comey objected, as he swore he would when he accepted the job.
The compromise which was worked out between Gonzales and Comey didn't work - illegal surveillance continued to current times according to majority opinion.

In fact, it became much worse. The later XKeyscore spying system allowed an operator to wiretap and scrutinize the communications of any American, according to Edward Snowden.

The epic confrontation with the president was too exhausting and ineffective to repeat. Around a year later, both Comey and Wray had had enough - they both left for private practice. Ashcroft had gone, Gonzales had been promoted above them and they had to watch Karl Rove in action with Gonzales - with the smearing and eventual firing of very good US Attorneys.
Comey testified later that the DOJ had become political.

The Firing of Good US Attorneys

Eleven US Attorneys were fired.

The process started soon after the Comey confrontation above. The witch hunt was partly to find who were "loyal Bushies", partly to find who was investigating Republican corruption, partly to find who wasn't following orders in investigate "imagined Democratic voter fraud" (it didn't really exist except in the imaginations of certain Republican party hacks), and one case to artificially create a vacancy so that Karl Rove's former assistant could become a US Attorney.

Fortunately, Congress investigated and Gonzales, who had been promoted to Attorney General (!), was forced to resign. Karl Rove refused to testify or cooperate and exiled himself to Sweden where he was friends with the Prime Minister and others.

The first one to be fired was Thomas DiBiagio. He was officially fired on January 2, 2005, but there was a very nasty and time consuming process the White House had to go through to get rid of him which probably started around the middle of 2004.

Regardless of how efficient, well-regarded or honest they were, (in most cases) their reputation and record was smeared to enable dismissal on "the performance related grounds" as specified by the Patriot Act. 

DiBiagio stated that he was ousted because of political pressure over public corruption investigations into the administration of Republican Gov. Robert L. Ehrlich Jr.

All the above people were Republicans or Republican appointed, including Comey, Wray, Ashcroft, Mueller  Goldsmith and the US Attorneys. It was a very significant betrayal of basic humanity to destroy the reputation of trusting, loyal, efficient people whom the White House had willingly appointed, merely for selfish gain. (Comey recently left the Republican party and is now independent.)

You might call it ruthless with no redeeming features.

Criminal Bank Corruption Supports Politicians

Where is the real pay-off? There must have been a strong motivation for all of this. There are some smoking guns which plausibly give answers.

Stellar Wind generated massive data on any ordinary American person. Edward Snowden claimed: “If I had wanted to pull a copy of a judge’s or a senator’s e-mail, all I had to do was enter that selector into XKEYSCORE,” one of the NSA’s main query systems.

The utter ruthlessness of the White House to the best, most honest, and efficient Republican US Attorneys was likely reflected in a corresponding ruthless handling of the illegal private data it harvested through Stellar Wind.

Logically, it would think nothing of tracking big bank opponents for any dirt they could find on them. Here are some hypothetical examples.

HSBC Corruption and SDNY

HSBC bank was guilty of mind-boggling money-laundering on behalf of murderous drug cartels, terrorists and sanctioned states. Over 4 years, it processed an incomprehensibly huge number of transactions without any review - around 67 million wire transfers totalling over $200 trillion.
However, it did review and report to the Internal Revenue Service (IRS) 3 transactions totalling $10,000 from Elliot Spitzer, who had legitimately prosecuted several big banks. Millions of SARs (Suspicious Activity Reports) are generated each week and flow into the IRS nationwide, but Spitzer's were singled it out for attention to criminal investigators.

While Spitzer's name was flashed across the world for 8 months, forcing his resignation, the Republican US Attorney Michael Garcia s.l.o.w.l.y decided that there was no charge to press. Incredibly, the name of the reporting bank - HSBC - was initially kept secret. 

The White House had set up a grotesque situation. They fired US Attorneys for not prosecuting Democrats, and because they investigated Republicans for corruption, and because they were not "loyal Bushies". 

Logically, that means that Michael Garcia survived by being generally in a category of US Attorneys who did investigate Democrats, refrained from prosecuting Republicans and was a reasonably "loyal Bushie". His team can't be assumed to be innocent - he is required to make every diligent effort to show he was not corruptly tainted - which he clearly did not do. His team's actions suggest the opposite - a tainted process which predictably maximized damage on a Democrat governor who was never charged.

I personally reported organized crime in Credit Suisse bank operating through his district (SDNY) and sent overwhelming evidence of this. I personally spoke to the investigator who received my reports, so I know first hand their attitude. To put it mildly, it was not a good, professional or remotely reasonable attitude.

My message was clear - Credit Suisse had a very big criminal operation going through SDNY which was a danger to the world's financial system.

Since then, my warnings have been 1,000% confirmed. The world's financial system nearly collapsed because of the type of crimes I was warning Garcia's Office of. Credit Suisse was criminally convicted of crimes going back decades involving hundreds (probably thousands) of employees using Mafia-like strategies of secret remote controlled elevators etc. The very worst centre was in New York, under Michael Garcia's nose, where I warned him it was.

A recent US Congress report describes how the DOJ blocked the criminal indictment of HSBC despite its stupefying criminal abuses. Download that report here and the summary here

The Brink of Possible Catastrophe

A recipe for catastrophe: the continued persecution of criminal bank whistle-blowers while massive bank crimes are let off with a "slap on the wrist" or ignored or  hidden.
There are many more examples, e.g.:
William Lerach representing Enron pension funds, was jailed gutting the victims' litigation, while massive bank crimes were ignored
Herve Falciani's HSBC warnings were ignored by the DOJ, he became a victim of murder attempts until given French government protection.
HSBC didn't check $200 trillion in wire transfers allowing Mexican and Colombian drug and murder cartels to launder an immense fortune of criminal profits.
The DOJ has told the Second Circuit to overrule a lower court’s decision to partially unseal a report into HSBC's failures to combat money laundering. It appears that the DOJ is unrepentant and it is still concealing crime in banks.
Bradley Birkenfeld exposed massive criminal practices by both UBS & Credit Suisse, but was jailed.
The emasculation of SEC Enforcement (Commissioner Gallagher was complicit)  
The failure of DOJ Financial Enforcement (refused to seriously act against most crime in banks especially Credit Suisse). 

Chris Wray: Can He do the FBI Top Job?

There are many things he needs to answer for at his hearing. On the face of it, he appears skilled at helping criminal banks like Credit Suisse to escape fair consequences for mammoth crimes and at helping flaky politicians like Christie to hide his cell phone with the vital evidence it contained of his suspected participation in Bridgegate.

Governor Christie was never called to account for his breach of responsibility regarding Bridgegate, but guess who paid for his legal expenses? Taxpayers and toll-payers. The victims are further victimised. There is an old saying which may give insight: "never give a sucker a break". 

Wray also helped a client who was an energy company president in a criminal investigation by Russian authorities. Obviously, such achievements make him highly attractive to a certain category of wealthy client.

However, he only wanted to advertise the Russian part of his experience up until around November 2016 because he has since removed it from his public bio. It is still stored on the web archive Wayback machine. Any credible hearing on his appointment will need to expose whatever significance this might have.

Wray was the assistant attorney general overseeing the criminal division under George W Bush, in charge of investigations into corporate fraud. This was the "golden age" of criminal banking and corporate fraud, where politically connected corporations were so wealthy from illegitimate riches that they could donate fantastically to both the Republicans and the Democrats. He oversaw the Enron whitewash where the criminal banks who were at the root cause of Enron's collapse and the destruction of pension funds investments, were not prosecuted for their crimes. Instead, the DOJ jailed the successful lead attorney for the victims over what was, in comparison, a triviality out of all proportion to the banks'crimes. Credit Suisse escaped almost free for its role, if you ignore the cost of its enormous "army of lawyers". Meaning that once again, it paid nothing to its victims, with the help of its conscience-less lawyers.

The history of the DOJ and SEC regarding the Great Recession and its causes scream a massive lack of proportionality. Small entities were hounded into oblivion while the biggest criminals enjoyed protection and preference. Wray's history in the DOJ and since is entirely consistent with this indescribable tragedy.

These are not the skills the USA needs of the next FBI director.

Comey was brave enough to stand up to Bush and company - but sadly, it was a failure. The loyal Bushies went on to bigger and more sinister corrupt activity, including perverting the government's secret surveillance of its citizens into a criminal operation. We speculate it was used to protect criminal banks and persecute whistle-blowers, which is simply the normal practice of corrupt regimes everywhere.

In the end, Comey and Wray realized they had lost the important battles and abandoned the DOJ for private practice, as most ordinary sensible people would probably have done. The DOJ continued its downward spiral until the financial system imploded. The "people's recovery package" largely went to the rich and powerful, often through gob-smackingly outrageous corruption, and now trillions of dollars have been sucked out of the US economy into secrecy jurisdictions. Junior school economics tells us that this is setting us up for an even bigger version of the "Greatest Recession" ever.

The USA is suffering from financial anaemia and has difficulty breathing. It needs more iron in its system to get its oxygen back, so it can run again. The rest of the world is generally in a corresponding situation. If no-one fixes it, there will be a blockbuster sequel to the Great Recession.

The past is not necessarily a reliable indicator for Chris Wray's future performance, but Wray has not yet shown indications of producing what is needed of him. IF he is serious about doing this job (he will have to swear to uphold the constitution, including when that means acting against the president), and IF congress and the president are serious about getting things fixed, then they will all need to wake up and demonstrate something far more intelligent than we have seen to date. Things can change, but as of today, Chris Wray's biggest selling point is that the President could appoint someone far worse, and that's not nearly enough for what the USA needs, even if it gets him a job and a pension when the world gets another financial crisis.

Chris Wray v the Law

  Uploaded - Thursday, June 08, 2017

Chris Wray - v - the Law

President Trump has nominated Chris Wray to be the Director of the FBI, replacing Comey whom he fired because of his investigation of Russian sabotage of the US Presidential election.

Chris Wray obtained fame because of the way in which he represented criminal bank Credit Suisse. He obtained incredibly lenient consequences for the bank's horrendous crimes.

1. He  served as a member of the Bush administration’s corporate fraud task-force
President George W. Bush's corporate fraud task-force was so successful at protecting corporate crime that we had the Great Recession.
Being part of that failure is hardly a recommendation.

2. He led the fraud investigation of Enron Corp.
This was another spectacular failure to administer justice for the taxpayers who paid his salary. The Enron criminal conspiracy was a partnership between a small number of individual executives and big banks like Credit Suisse. The banks were never prosecuted for aiding and abetting the fraud or for criminal conspiracy when there was abundant evidence. Informed observers had little doubt regarding their responsibility. Only the banks had the capacity to pay compensation to the pensioners victims. After having looted massive profits from their dirty deals, some of the involved banks like Credit Suisse paid almost nothing, except for their "army of lawyers". The victims had no "private right of action" which put responsibility for executing civil justice with Wray and his team - who did almost nothing in this respect.

However, the DOJ did put William Lerach in jail. He was the highly effective attorney leading victims' attempts to negotiate billions of dollars compensation from the Enron banks. Once he was jailed, the victims' efforts fell to pieces - they got almost nothing more. "Lucky Credit Suisse" escaped Lerach's clutches with DOJ assistance. 

3. The record confirms the draconian treatment of opponents of criminal banks while massive bank crimes were ignored: William Lerach (representing Enron pension funds, but was jailed), Herve Falciani (ignored by the DOJ, a victim of murder attempts until given French government protection), Bradley Birkenfeld (exposed massive criminal practices by both UBS & Credit Suisse, but was jailed), Eliot Spitzer (prosecuted many criminal banks but reported by HSBC & forced out of office), the emasculation of SEC Enforcement (Commissioner Gallagher was complicit) and the failure of DOJ Financial Enforcement (refused to act against most crime in banks especially Credit Suisse). 

Does He Even Know the Law?

Since leaving the DOJ, he has mostly defended rich corporate clients. Cynics complain that there was no real change to what he was effectively doing with the DOJ.

He represented Credit Suisse in its 2014 criminal conviction and settlement. In our opinion, he flouted the law to help engineer a white-wash settlement for monumental crimes by the bank which crippled US finances. It was a deceitful settlement of convenience which froze ordinary victims out of the "cozy settlement".

Here are extracts from the Transcript of the Plea Agreement Hearing which is: Document 17 Filed 05/27/14, Case 1:14-cr-00188-RBS, Eastern District of Virginia:

Now, in order to proceed, again, the Court places you under oath. Once you're placed under oath, all of your answers have to be full and complete and truthful. If they're not, you yourself and/or Credit Suisse can be subjected to a further prosecution for perjury or making a false statement to the Court.
 (Credit Suisse was placed under oath to make all answers full and complete and truthful.)

THE COURT: And this particular plea agreement, then, represents the full understanding of the United States and Credit Suisse AG?
MR. LYTLE: That's correct, Your Honor.
THE COURT: Now, I would ask you, Mr. Wray: Is that your understanding as well?
MR. WRAY (Counsel for CREDIT SUISSE AG): That's my understanding as well, Your Honor.

THE COURT: All right. And I would also ask you, Mr. Reifenberg: Is that your understanding?
MR. REIFENBERG (CREDIT SUISSE AG'S REPRESENTATIVE): That's also my understanding, Your Honor.

In summary, Chris Wray and the others swore that the Plea Agreement, which includes the Statement (Stipulation) of Facts, represented the full understanding of both parties.

The only problem is that this was rubbish.

Both Credit Suisse and the DOJ knew far more than was stated. It was a cover-up.

Here is the legal context. (Note: Statement of Facts and Stipulation of Facts are interchangeable terms.)

The United States Sentencing Guidelines (USSG) Manual §6B1.4 states:
(a) A plea agreement may be accompanied by a written stipulation of facts ….. stipulations shall:
(1) set forth the relevant facts and circumstances of the actual offense conduct and offender characteristics;
(2) not contain misleading facts; and
(3) set forth with meaningful specificity the reasons why the sentencing range resulting from the proposed agreement is appropriate.
(b) To the extent that the parties disagree about any facts relevant to sentencing, the stipulation shall identify the facts that are in dispute. ……
 (d) The court is not bound by the stipulation……

This provision requires that when a plea agreement includes a stipulation of fact, the stipulation must fully and accurately disclose all factors relevant to the determination of sentence. This provision does not obligate the parties to reach agreement on issues that remain in dispute or to present the court with an appearance of agreement in areas where agreement does not exist. Rather, the overriding principle is full disclosure of the circumstances of the actual offense and the agreement of the parties. The stipulation should identify all areas of agreement, disagreement and uncertainty that may be relevant to the determination of sentence. Similarly, it is not appropriate for the parties to stipulate to misleading or non-existent facts, even when both parties are willing to assume the existence of such "facts" for purposes of the litigation. Rather, the parties should fully disclose the actual facts and then explain to the court the reasons why the disposition of the case should differ from that which such facts ordinarily would require under the guidelines.

Was Wray Ignorant?


Wray previously represented the same bank Credit Suisse, regarding its billion dollar money-laundering for the world's number one state sponsor of terrorism - Iran.
Wray also signed the deferred prosecution agreement which included the horrendous Statement of Facts.
The bank had created a sophisticated criminal scheme to deliberately flout US sanctions using an outrageous arrangement involving two of its Pension Fund managers.
No-one knows for certain if it used pension money to "wash" dirty money.

However, it is certain that higher management approval was essential to execute the criminal scheme, but no bank managers were prosecuted. 

Wray knew for certain what sort of a customer he was serving.

Imagine what would have happened if Wray had investigated a LGBT or Muslim person who laundered a billion dollars to help terrorists develop nuclear weapons and missiles? So much for his integrity and respect for the law.

We personally notified the DOJ of CS's criminal practices while he worked there. Even if, in the unlikely event, he didn't know when he signed off on the bank's terrorism money-laundering crimes, he absolutely knew then and continued to sell himself to that criminal bank.

Then he not only signed off on the bank's criminal conviction for sabotaging the integrity of the US tax system, but he flouted the law in a manipulated illegitimate settlement which white-washed the bank's incredible crimes and "let ordinary victims rot in the gutter", in a similar manner to how they were treated in the Enron catastrophe.

Here is a summary:

Credit Suisse’s massive criminal misconduct / evidence destruction

US Attorney General Eric Holder, December 16, 2009: 
“…the criminal misconduct perpetrated by Credit Suisse in this case is simply astounding”; “created a 'how-to' book on committing a crime”;
“robbed our system of the legitimacy that is fundamental to its success”

Credit Suisse employees systematically stripped the identities of Iranian banks enabling funds to be transferred to the Atomic Energy Organization of Iran and the Aerospace Industries Organization, entities involved in the production of nuclear weapons and long range missiles. Credit Suisse advised Iranian banks such as Bank Melli and Bank Saderat on methods to hide their identities and send more than a billion dollars through New York banks.

Credit Suisse was fined $536m for violating US sanctions against Iran. Court documents  say Credit Suisse systematically hid the identity of its Iranian clients when moving millions of dollars on their behalf. 

The US Attorney General described it as : “…massive financial misconduct at one of the world's largest global banks, Credit Suisse. In both its scope and complexity, the criminal misconduct perpetrated by Credit Suisse in this case is simply astounding. Indeed, as set forth in the court documents filed today, this case offers a stark and disturbing example of the lengths to which some corporate wrongdoers are willing to go in seeking ill-gotten financial gains…… They created a 'how-to' book on committing a crime… Credit Suisse thought it didn't need to play by the rules…. Credit Suisse's decades-long scheme to flout the rules that govern our financial institutions robbed our system of the legitimacy that is fundamental to its success.”

It is feared that Iran will assist terrorists to explode a nuclear bomb in a US or European city – it has the ability to make “dirty” (highly toxic and radioactive) nuclear bombs. Credit Suisse may have effectively financed a future nuclear holocaust.

Thus CS funded the nuclear program of the world's “most active state sponsor of terrorism”, a central member of President George W. Bush’s “axis of evil”:

More Source Documents for the above are here.

Birds of a Feather Flock Together?

A serious contender for Director of the FBI needs to watch who he or she associates with.

Either, Wray was extremely careless, or  ....?

Iran - Qatar - Credit Suisse 

Qatar was the second largest shareholder in Credit Suisse. Jassim Bin Hamad J.J. Al Thani was on the bank's board and is the son of the prime minister.
Now Qatar is being isolated from the other main neighbouring states for allegedly supporting Iran and its terrorist activities. It fuels speculation of some type of Iran - Qatar - Credit Suisse coalition.

Public Entrance Goes Nowhere

  Uploaded - Thursday, May 04, 2017

Public Entrance Goes Nowhere

Story behind the cartoon: There were 700 cases of whistle-blower complaints from Wells Fargo employees in 2010 - 6 years before the scandal became public. That's more than an average of two whistle-blower warnings every week.

The bank's regulator (the OCC) released a damming report in April this year of how the bank's management and the regulator knew of the fraudulent practices, hundreds of whistle-blower complaints, yet the only action taken was punish the workers and the whistle-blowers. Thousands of low level employees were fired for not making the unrealistic sales targets demanded of them. Some lodged complaints with the bank's internal whistle-blower office but were fired because they lodged those complaints.

The board of directors’ investigation into the company's fraud released a 110 page report, claiming that the board was not to blame, even though supervising the executives is their statutory responsibility!

The SFC reported: "The report felt less like a credible fact-finding inquiry than a perfunctory legal document to provide cover for the directors, who already face lawsuits for breach of fiduciary duty. Amazingly, the board did not even offer a cursory attempt to assume some measure of responsibility for the company’s behavior. Not even a “We’re sorry that we didn’t do a better job overseeing Wells Fargo.”

The "best banker in America" was blamed for the mess

Instead, the bank blamed Carrie Tolstedt, the former head of community banking who was fired. Bank CEO Stumf had previously called Tolstedt the "best banker in America."

Duke Law School professor James Cox said: “There’s a tremendous amount of pressure from regulators to throw someone under the bus. If they don’t, then Wells Fargo is going to be even more in the crosshairs.”

Wells Fargo's board says that it has clawed back $67 million from Tolstedt and $69 million from Stumpf, and that a total of more than $180 million in compensation is being taken back by the bank from various senior executives. Five executives have been fired as well, including Tolstedt.

Some of these were through the bank's "fake whistle-blower" program. It was regarded as fake because in some instances, the employees were fired for making their reports. For these employees it was like a "whistle-blower rat trap". A further 5,300 low level employees were fired like scapegoats. Wells Fargo also exploited a binding arbitration clause to deflect customers' fraud allegations, a system in which customers are at an overwhelming disadvantage - judges effectively collude with big companies to bury fraud allegations.

Incredibly, the bank succeeded in getting several judges to toss fraud lawsuits over the bogus accounts by asserting that, even though the accounts were fake, they stemmed from legitimate accounts the victims opened, in which they agreed to submit any future disputes with the bank to an arbitrator.

The bank's unbelievable excuse for these 700 complaints was: "The primary reason for the high number of complaints is that the culture encourages valid complaints which are then investigated and appropriately addressed." 

One whistle-blower complaint reviewed by Reuters alleged that service managers, branch managers and district managers were "well versed in the art of creative selling" and that customer sales staffers had "direct orders to mislead customers." No bankers have been criminally prosecuted.

Federal bank regulators and examiners assigned to review Wells Fargo were aware of the 700 whistle-blower complaints in January 2010, but did nothing until 2016.

Five months before the Well Fargo scandal broke, Credit Suisse bankers were dreaming of getting recruited/rescued by WELLS FARGO. Read: Sad Credit Suisse Bankers Dreamed Of Day Wells Fargo Would Come Rescue Them - "..things are so bad on the Credit Suisse trading floor that the idea of Wells Fargo riding in on its stagecoach and whisking investment bankers off to San Francisco was a bright moment in an otherwise dark time..."

Relevance: This post might be the 701st whistle-blower scream about crime and manipulation in Credit Suisse - so public exposure of the truth is now closer. While criminal banks continue to make illegal profits, non-criminal banks will struggle to compete and survive without also regarding illegal and fraudulent practices as the "best banking practices in the world".

Wildly Inaccurate Litigation Provisions

The 2016 Credit Suisse AGM accepted wildly inaccurate litigation estimates. There were warnings from this Blog. In brief, CHF1.605 billion was budgeted.
The result: about 4 times this much!
There was a warning that "estimable unknowns" could add a further zero to CHF 2.2 billion but the projected range of CHF 1.605 to 3.805 billion was obviously explosively deceptive. On top of that, these "estimable unknowns" were not accounted for on the balance sheet. That means that they did not adversely impact the capital ratio while the actual litigation allowance did since it was a budgeted expense. The deceit may have been intentional because there was ample warning of substantial penalties for which no provision was made.

To add insult to injury, investors were "conned" into a "Discharge of the acts of the members of the Board and Executive Board". It was hidden on page 184 the bank's 438 page annual report but it is a very powerful provision. The only "non-explanation" is on the next page (185):

"Discharge of the acts of the Board and the Executive Board. According to Swiss law, the AGM has the power to discharge the actions of the members of the Board and the Executive Board. The 2016 AGM granted discharge to the members of the Board and the Executive Board for the 2015 financial year."

It was not mentioned at all in the 20 page summary document but was passed by the AGM on April 28, 2017 without a squeal from shareholders who apparently are happy to get criminal profits. It was Point 2 on the AGM agenda.

Under Swiss law, it (conditionally but effectively) bars shareholders from bringing claims for violation of directors' duties including wilful misconduct, fraud or any criminal offences.

There were many costly settlements, but one alone - for $5.28 billion exceeded the budget. This was the widely anticipated settlement with the DOJ for selling " complete crap etc" hidden in their Residential mortgage-backed securities (RMBS)

You can find the litigation provisions at Pages: 375-382 of the 2015 Annual Report presented and accepted at the April 2016 AGM. There is a huge disclaimer, meaning you won't be able to sue them, but they might sue you if you are not very nice.

The 2017 AGM again accepted the doubtful litigation estimates despite warnings from this Blog. In brief, CHF 3.839 billion was budgeted for with a warning that "estimable unknowns" could add a further zero to CHF 1.1 billion. Projected range: CHF 3.839 to 4.939 billion.
There is no clarity about the underlying maths behind these numbers. Apparently a fair proportion of the $5.28 billion DOJ settlement is included but it is not disclosed (in this section).

Also, the $10 billion lawsuit by NY State was approved by the Supreme Court over the bank's objections. There appears to be no clarity where that fits into the litigation provisions. From my simplistic assessment, that $10 billion alone is more than double the maximum projected losses. The case is mentioned under the heading: NYAG and NJAG litigation, but incredibly, no numbers are quoted. $10 billion is a lot to overlook. One suspects that they didn't think many informed people would read that section.

There will likely be many costly settlements. Within a few days of the Annual Report being accepted, there was already one for $400 million. It was for a small number of the innumerable Credit Unions which failed due to the deceitful financial packages (time bombs) sold by banks. You probably shouldn't call it fraud or crime because the bank didn't admit fault. The settlement is only a pittance compared to the real damage done. 
You can find the litigation provisions at pages: 374-382 of the 2016 Annual Report presented and accepted at the April 2017 AGM. Again, there is a huge disclaimer, so don't try and sue them. The page numbers were nearly identical to the previous year which is strange considering that a lot happened in the year and a lot more is forewarned. Perhaps the bulk of the Annual Report is simply a "copy/paste" job from the previous year on the basis that almost nobody will read it. Truthfully, almost nobody could read and comprehend it, partly because some of it is written in a way to deceive rather than to inform readers. For the record, it was pages 375-382 of the 2015 Annual Report (presented and accepted at the April 2016 AGM.)

No Media Analysis
There has been no media analysis (to our knowledge) of the bank's litigation provisions or evidence that the Annual report was even read. Perhaps not surprising - even the page numbers very closely correspond to last year's report. Maybe no-one at the bank read it either (except for the monstrous disclaimer which theoretically would allow the bank to punish anyone trying to sue them - of course I am not suggesting that the bank would have such a motivation) apart from the poor conscripts who "wrote" it. I suspect that diligent journalists were awestruck by the leadership photo-artwork on page 7 copied below, and just assumed that the remaining 431 pages were good.

However, the bank has a delicate capital ratio and 75% of the CHF 4 billion capital raising / share dilution will go to paying executive bonuses. So as a public service we have copied the entire section on litigation below. It is a vital statistic which could determine whether the bank survives a major financial shock to the world economy. In our opinion, based on our comparison with known bank disputes, it is pretty poor. 

Nine lines were devoted to the $5.28 billion settlement with scant detail about when it will all be charged.
The massive amount of litigation against this "irreproachable" bank shows that there are a lot of people out there who are very unhappy with Credit Suisse.

Section 39 Litigation - Annual Report Pages: 374-382

The Group is involved in a number of judicial, regulatory and arbitration proceedings concerning matters arising in connection with the conduct of its businesses, including those disclosed below. Some of these proceedings have been brought on behalf of various classes of claimants and seek damages of material and/or indeterminate amounts.

The Group accrues loss contingency litigation provisions and takes a charge to income in connection with certain proceedings when losses, additional losses or ranges of loss are probable and reasonably estimable. The Group also accrues litigation provisions for the estimated fees and expenses of external lawyers and other service providers in relation to such proceedings, including in cases for which it has not accrued a loss contingency provision. The Group accrues these fee and expense litigation provisions and takes a charge to income in connection therewith when such fees and expenses are probable and reasonably estimable. The Group reviews its legal proceedings each quarter to determine the adequacy of its litigation provisions and may increase or release provisions based on management’s judgment and the advice of counsel. The establishment of additional provisions or releases of litigation provisions may be necessary in the future as developments in such proceedings warrant.

The specific matters described below include (a) proceedings where the Group has accrued a loss contingency provision, given that it is probable that a loss may be incurred and such loss is reasonably estimable; and (b) proceedings where the Group has not accrued such a loss contingency provision for various reasons, including, but not limited to, the fact that any related losses are not reasonably estimable. The description of certain of the matters below includes a statement that the Group has established a loss contingency provision and discloses the amount of such provision; for the other matters no such statement is made. With respect to the matters for which no such statement is made, either (a) the Group has not established a loss contingency provision, in which case the matter is treated as a contingent liability under the applicable accounting standard, or (b) the Group has established such a provision but believes that disclosure of that fact would violate confidentiality obligations to which the Group is subject or otherwise compromise attorney-client privilege, work product protection or other protections against disclosure or compromise the Group’s management of the matter. The future outflow of funds in respect of any matter for which the Group has accrued loss contingency provisions cannot be determined with certainty based on currently available information, and accordingly may ultimately prove to be substantially greater (or may be less) than the provision that is reflected on the Group’s balance sheet.
It is inherently difficult to determine whether a loss is probable or even reasonably possible or to estimate the amount of any loss or loss range for many of the Group’s legal proceedings. Estimates, by their nature, are based on judgment and currently available information and involve a variety of factors, including, but not limited to, the type and nature of the proceeding, the progress of the matter, the advice of counsel, the Group’s defenses and its experience in similar matters, as well as its assessment of matters, including settlements, involving other defendants in similar or related cases or proceedings. Factual and legal determinations, many of which are complex, must be made before a loss, additional losses or ranges of loss can be reasonably estimated for any proceeding.

Most matters pending against the Group seek damages of an indeterminate amount. While certain matters specify the damages claimed, such claimed amount may not represent the Group’s reasonably possible losses. For certain of the proceedings discussed below the Group has disclosed the amount of damages claimed and certain other quantifiable information that is publicly available.

The following table presents a roll forward of the Group’s aggregate litigation provisions.

Litigation provisions

CHF million
Balance at beginning of period 1,605
Increase in litigation accruals 3,090
Decrease in litigation accruals (104)
Decrease for settlements and other cash payments (791)
Foreign exchange translation 39
Balance at end of period 3,839

The Group’s aggregate litigation provisions include estimates of losses, additional losses or ranges of loss for proceedings for which such losses are probable and can be reasonably estimated. The Group does not believe that it can estimate an aggregate range of reasonably possible losses for certain of its proceedings because of their complexity, the novelty of some of the claims, the early stage of the proceedings, the limited amount of discovery that has occurred and/or other factors. The Group’s estimate of the aggregate range of reasonably possible losses that are not covered by existing provisions for the proceedings discussed below for which the Group believes an estimate is possible is zero to CHF 1.1 billion.

After taking into account its litigation provisions, the Group believes, based on currently available information and advice of counsel, that the results of its legal proceedings, in the aggregate, will not have a material adverse effect on the Group’s financial condition. However, in light of the inherent uncertainties of such proceedings, including those brought by regulators or other governmental authorities, the ultimate cost to the Group of resolving such proceedings may exceed current litigation provisions and any excess may be material to its operating results for any particular period, depending, in part, upon the operating results for such period.

Enron-related litigation

Two Enron-related actions remain pending against Credit Suisse Securities (USA) LLC (CSS LLC) and certain of its affiliates, one in the US District Court for the Southern District of Texas and one in the US District Court for the Southern District of New York (SDNY). In these actions, plaintiffs assert they relied on Enron’s financial statements, and seek to hold the defendants responsible for any inaccuracies in Enron’s financial statements. In Connecticut Resources Recovery Authority v. Lay, et al., the plaintiff seeks to recover from multiple defendants, pursuant to the Connecticut Unfair Trade Practices Act and Connecticut state common law, approximately USD 130 million to USD 180 million in losses it allegedly suffered in a business transaction it entered into with Enron. A motion to dismiss is pending. In Silvercreek Management Inc. v. Citigroup, Inc., et al., the plaintiff seeks to assert federal and state law claims relating to its alleged USD 280 million in losses relating to its Enron investments. On November 9, 2015, the plaintiff moved for the court to suggest to the Judicial Panel on Multidistrict Litigation (JPML) that the JPML remand the case to the SDNY. On June 2, 2016, the JPML entered an order granting plaintiffs’ motion to remand the Silvercreek Management Inc. v. Citigroup, Inc., et al. case to the SDNY for further proceedings. Credit Suisse and the other defendants have filed a renewed motion to dismiss, which is pending.

Mortgage-related matters

Government and regulatory related matters

Various financial institutions, including CSS LLC and certain of its affiliates, have received requests for information from, and/or have been defending civil actions by, certain regulators and/or government entities, including the US Department of Justice (DOJ) and other members of the Residential Mortgage-Backed Securities (RMBS) Working Group of the US Financial Fraud Enforcement Task Force, regarding the origination, purchase, securitization, servicing and trading of subprime and non-subprime residential and commercial mortgages and related issues. CSS LLC and its affiliates are cooperating with such requests for information.

DOJ RMBS Settlement

On January 18, 2017, CSS LLC and its current and former US subsidiaries and US affiliates reached a settlement with the DOJ related to its legacy RMBS business, a business conducted through 2007. The settlement resolved potential civil claims by the DOJ related to Credit Suisse’s packaging, marketing, structuring, arrangement, underwriting, issuance and sale of RMBS. The settlement required the above mentioned entities to pay a USD 2.48 billion civil monetary penalty and, within five years of the settlement, to provide USD 2.80 billion in consumer relief. The civil monetary penalty under the terms of the settlement was paid to the DOJ in January 2017. The consumer relief measures include affordable housing payments and loan forgiveness. The DOJ and Credit Suisse agreed to the appointment of an independent monitor to oversee the completion of the consumer relief requirements of the settlement. As previously disclosed, Credit Suisse recorded a litigation provision of USD 2 billion in the fourth quarter of 2016 in addition to its existing provisions of USD 550 million recorded for this matter in prior periods.

NYAG and NJAG litigation

Following an investigation, on November 20, 2012, the New York Attorney General (NYAG), on behalf of the State of New York, filed a civil action in the Supreme Court for the State of New York, New York County (SCNY) against CSS LLC and affiliated entities in their roles as issuer, sponsor, depositor and/or underwriter of RMBS transactions prior to 2008. The action, which references 64 RMBS issued, sponsored, deposited and underwritten by CSS LLC and its affiliates in 2006 and 2007, alleges that CSS LLC and its affiliates misled investors regarding the due diligence and quality control performed on the mortgage loans underlying the RMBS at issue, and seeks an unspecified amount of damages. On December 18, 2013, the New Jersey Attorney General, on behalf of the State of New Jersey (NJAG), filed a civil action in the Superior Court of New Jersey, Chancery Division, Mercer County (SCNJ), against CSS LLC and affiliated entities in their roles as issuer, sponsor, depositor and/or underwriter of RMBS transactions prior to 2008. The action, which references 13 RMBS issued, sponsored, deposited and underwritten by CSS LLC and its affiliates in 2006 and 2007, alleges that CSS LLC and its affiliates misled investors and engaged in fraud or deceit in connection with the offer and sale of RMBS, and seeks an unspecified amount of damages. On August 21, 2014, the SCNJ dismissed without prejudice the action brought against CSS LLC and its affiliates by the NJAG. On September 4, 2014, the NJAG filed an amended complaint against CSS LLC and its affiliates, asserting additional allegations but not expanding the number of claims or RMBS referenced in the original complaint. Both actions are at early procedural points.

Civil Litigation Pages 376-382

CSS LLC and/or certain of its affiliates have also been named as defendants in various civil litigation matters related to their roles as issuer, sponsor, depositor, underwriter and/or servicer of RMBS transactions. These cases include or have included class action lawsuits, actions by individual investors in RMBS, actions by monoline insurance companies that guaranteed payments of principal and interest for certain RMBS, and repurchase actions by RMBS trusts, trustees and/or investors. Although the allegations vary by lawsuit, plaintiffs in the class actions and individual investor actions have generally alleged that the offering documents of securities issued by various RMBS securitization trusts contained material misrepresentations and omissions, including statements regarding the underwriting standards pursuant to which the underlying mortgage loans were issued; monoline insurers allege that loans that collateralize RMBS they insured breached representations and warranties made with respect to the loans at the time of securitization and that they were fraudulently induced to enter into the transactions; and repurchase action plaintiffs generally allege breached representations and warranties in respect of mortgage loans and failure to repurchase such mortgage loans as required under the applicable agreements. The amounts disclosed below do not reflect actual realized plaintiff losses to date or anticipated future litigation exposure. Rather, unless otherwise stated, these amounts reflect the original unpaid principal balance amounts as alleged in these actions and do not include any reduction in principal amounts since issuance. Further, unless otherwise stated, amounts attributable to an “operative pleading” for the individual investor actions are not altered for settlements, dismissals or other occurrences, if any, that may have caused the amounts to change subsequent to the operative pleading. In addition to the mortgage-related actions discussed below, a number of other entities have threatened to assert claims against CSS LLC and/or its affiliates in connection with various RMBS issuances, and CSS LLC and/ or its affiliates have entered into agreements with some of those entities to toll the relevant statutes of limitations.

Class action litigations

CSS LLC and certain affiliates and employees were defendants in a class action lawsuit in the SDNY, New Jersey Carpenters Health Fund v. Home Equity Mortgage Trust 2006-5, relating to two RMBS offerings, totaling approximately USD 1.6 billion, sponsored and underwritten by the Credit Suisse defendants. On May 10, 2016, the SDNY granted its final approval of a USD 110 million settlement and entered a final judgment and order of dismissal with prejudice in respect of this matter.

Individual investor actions

CSS LLC and, in some instances, its affiliates, as an RMBS issuer, underwriter and/or other participant, and in some instances its employees, along with other defendants, have been named as defendants in: (i) one action brought by the Federal Deposit Insurance Corporation (FDIC), as receiver for Citizens National Bank and Strategic Capital Bank in the SDNY, in which claims against CSS LLC and its affiliates relate to approximately USD 28 million of the RMBS at issue (approximately 20% of the USD 141 million at issue against all defendants in the operative pleading); such claims were dismissed in their entirety on March 24, 2015 by an SDNY order, which was appealed on April 7, 2015 by the FDIC; on January 18, 2017, the US Court of Appeals for the Second Circuit (Second Circuit) reversed the SDNY’s ruling, reinstating all previously-dismissed claims brought by the FDIC as receiver for Citizens National Bank and Strategic Capital Bank in the SDNY against CSS LLC and its affiliates; (ii) two actions brought by the FDIC, as receiver for Colonial Bank: one action which, following the United States Supreme Court’s denial of defendants’ petition for writ of certiorari on January 9, 2017, will resume in the SDNY, in which claims against CSS LLC relate to approximately USD 92 million of the RMBS at issue (approximately 23% of the USD 394 million at issue against all defendants in the operative pleading); and one action in the Circuit Court of Montgomery County, Alabama, in which claims against CSS LLC and its affiliates relate to approximately USD 153 million of the RMBS at issue (approximately 49% of the USD 311 million at issue against all defendants in the operative pleading); on February 14, 2017, the Circuit Court of Montgomery County dismissed with prejudice claims pertaining to one RMBS offering on which CSS LLC and its affiliates were sued, reducing the RMBS at issue for CSS LLC and its affiliates from approximately USD 153 million to approximately USD 139 million (approximately 45% of the USD 311 million at issue against all defendants in the operative pleading); (iii) one action brought by the Federal Home Loan Banks of Seattle (FHLB Seattle) in Washington state court, in which claims against CSS LLC and its affiliates relate to approximately USD 249 million; on May 4, 2016, the Washington state court presiding in the action granted CSS LLC and its affiliates’ motion for partial summary judgment, dismissing with prejudice all claims related to certain RMBS, thus reducing the RMBS at issue against CSS LLC and its affiliates from approximately USD 249 million to approximately USD 104 million; on August 9, 2016, a stipulation of voluntary dismissal with prejudice was filed with the Washington state court, which was entered by the court on August 10, 2016, dismissing the action brought by the FHLB Seattle against CSS LLC and its affiliates; on August 30, 2016, FHLB Seattle appealed the Washington state court’s August 10, 2016 final judgment and order of dismissal, seeking reversal of the court’s May 4, 2016 order; the appeal is pending; (iv) one action brought by the Federal Home Loan Bank of Boston in the US District Court for the District of Massachusetts, in which claims against CSS LLC and its affiliates relate to approximately USD 333 million, reduced from USD 373 million following the October 27, 2015 stipulation of voluntary dismissal with prejudice of claims pertaining to certain RMBS offerings on which CSS LLC and its affiliates were sued (approximately 6% of the USD 5.7 billion at issue against all defendants in the operative pleading); on February 6, 2017, the Federal Home Loan Bank of Boston’s claims were remanded to the Suffolk County Superior Court; (v) two actions by Massachusetts Mutual Life Insurance Company in the US District Court for the District of Massachusetts, in which claims against CSS LLC and its employees relate to approximately USD 107 million of the RMBS at issue (approximately 97% of the USD 110 million at issue against all defendants in the operative pleadings) and for which a trial is scheduled to begin in July 2017; (vi) one action brought by Watertown Savings Bank in the SCNY, in which claims against CSS LLC and its affiliates relate to an unstated amount of the RMBS at issue; and (vii) one action brought by the Tennessee Consolidated Retirement System in Tennessee state court in which claims against CSS LLC relate to approximately USD 24 million of RMBS at issue against CSS LLC (approximately 4% of the USD 644 million at issue against all defendants in the operative pleading).
CSS LLC and certain of its affiliates and/or employees are the only defendants named in: (i) one action brought by CMFG Life Insurance Company and affiliated entities in the US District Court for the Western District of Wisconsin, in which claims against CSS LLC relate to approximately USD 70 million of RMBS and which has a trial scheduled to begin in October 2017; on December 16, 2016, the US District Court for the Western District of Wisconsin dismissed in part the action brought against CSS LLC, reducing the RMBS at issue for CSS LLC from approximately USD 70 million to approximately USD 62 million; (ii) one action brought by Deutsche Zentral-Genossenschaftsbank AG, New York Branch in the SCNY, in which claims against CSS LLC and its affiliates relate to approximately USD 111 million of RMBS; (iii) one action brought by IKB Deutsche Industriebank AG and affiliated entities in the SCNY, in which claims against CSS LLC and its affiliates relate to approximately USD 97 million of RMBS; (iv) one action brought by the National Credit Union Administration Board (NCUA) as liquidating agent of the US Central Federal Credit Union, Western Corporate Federal Credit Union and Southwest Corporate Federal Credit Union in the US District Court for the District of Kansas, in which claims against CSS LLC and its affiliate relate to approximately USD 311 million of RMBS, for which the US District Court for the District of Kansas issued an order on May 27, 2015 vacating its prior partial dismissal of the action, increasing the RMBS at issue for CSS LLC and its affiliates from approximately USD 311 million to USD 715 million and which has a trial scheduled to begin in April 2017; on March 23, 2017, CSS LLC and its affiliate reached an agreement in principle to resolve the action with the NCUA; (v) one action brought by Phoenix Light SF Ltd. and affiliated entities in the SCNY, in which claims against CSS LLC and its affiliates relate to approximately USD 362 million of RMBS, which was dismissed in its entirety on April 16, 2015; on November 17, 2016, the SCNY, Appellate Division, First Department, issued an order reinstating all previously-dismissed claims brought by Phoenix Light SF Ltd. and affiliated entities against CSS LLC and its affiliates; and (vi) one action brought by Royal Park Investments SA/NV in the SCNY, in which claims against CSS LLC and its affiliate relate to approximately USD 360 million of RMBS. These actions are at various procedural stages.

As disclosed in Credit Suisse’s quarterly Financial Reports for 2016, individual investor actions discontinued during the course of 2016 included the following: (i) on April 22, 2016, the SDNY entered judgment without any admission of liability against CSS LLC and its affiliates in favor of the National Credit Union Administration Board, as liquidating agent of the Southwest Corporate Federal Credit Union and Members United Corporate Federal Credit Union, in the amount of USD 50.3 million (plus attorneys’ fees and costs), resolving all claims related to approximately USD 229 million of RMBS at issue; (ii) on June 1, 2016, following a settlement, a stipulation of dismissal with prejudice was filed with the US District Court for the Middle District of Alabama, which was entered by the court on June 8, 2016, discontinuing the action brought by the FDIC as receiver for Colonial Bank relating to approximately USD 34 million of the RMBS at issue (approximately 12% of the USD 283 million at issue against all defendants in the operative pleading); (iii) on June 8, 2016, following a settlement, the US Court of Appeals for the Ninth Circuit, presiding in the appeal of the action brought by the FDIC as receiver for Colonial Bank in the US District Court for the Central District of California (CDC), granted the stipulation withdrawing the FDIC’s appeal of the CDC’s dismissal with prejudice of all claims against CSS LLC relating to approximately USD 12 million of the RMBS at issue (approximately 5% of the USD 259 million at issue against all defendants in the operative pleading); thus the entire action is dismissed with prejudice; and (iv) on July 28, 2016, following a settlement, the Texas state court presiding in the action brought by the Texas County and District Retirement System dismissed with prejudice all claims against CSS LLC; these claims related to an unstated amount of the RMBS at issue.
In addition, on January 27 and January 30, 2017, following a settlement, the California state court presiding over the actions brought by the Federal Home Loan Bank of San Francisco dismissed with prejudice all claims against CSS LLC and its affiliates, in which claims against CSS LLC and its affiliates related to approximately USD 1.6 billion (approximately 17% of the USD 9.5 billion at issue against all defendants in the operative pleadings, reduced to reflect dismissal of actions relating to certain certificates).

Monoline insurer disputes

CSS LLC and certain of its affiliates are defendants in one monoline insurer action pending in the SCNY, commenced by MBIA Insurance Corp. (MBIA) as guarantor for payments of principal and interest related to approximately USD 770 million of RMBS issued in offerings sponsored by Credit Suisse. One theory of liability advanced by MBIA is that an affiliate of CSS LLC must repurchase certain mortgage loans from the trusts at issue. MBIA claims that the vast majority of the underlying mortgage loans breach certain representations and warranties, and that the affiliate has failed to repurchase the allegedly defective loans. In addition, MBIA alleges claims for fraud, fraudulent inducement, material misrepresentations, breaches of warranties, repurchase obligations, and reimbursement. MBIA submitted repurchase demands for loans with an original principal balance of approximately USD 549 million. Discovery is complete, and the parties argued their respective summary judgment motions in November 2016, which remain pending.

Repurchase litigations

DLJ Mortgage Capital, Inc. (DLJ) is a defendant in: (i) one action brought by Asset Backed Securities Corporation Home Equity Loan Trust, Series 2006-HE7, in which plaintiff alleges damages of not less than USD 341 million, which was dismissed without prejudice by order of the SCNY on March 24, 2015, which order was appealed, and which action was re-filed on September 17, 2015 (stayed against DLJ pending resolution of all pending appeals); (ii) one action brought by Home Equity Asset Trust, Series 2006-8, in which plaintiff alleges damages of not less than USD 436 million; (iii) one action brought by Home Equity Asset Trust 2007-1, in which plaintiff alleges damages of not less than USD 420 million; (iv) one action brought by Home Equity Asset Trust Series 2007-3, in which plaintiff alleges damages of not less than USD 206 million, which was dismissed without prejudice by order of the SCNY on December 21, 2015 with leave to restore within one year and which plaintiff moved to restore on December 20, 2016, which the court granted on March 15, 2017 by restoring the case to active status; (v) one action brought by Home Equity Asset Trust 2007-2, in which plaintiff alleges damages of not less than USD 495 million; and (vi) one action brought by CSMC Asset-Backed Trust 2007-NC1, in which no damages amount is alleged. DLJ and its affiliate, Select Portfolio Servicing, Inc. (SPS), are defendants in: one action brought by Home Equity Mortgage Trust Series 2006-1, Home Equity Mortgage Trust Series 2006-3 and Home Equity Mortgage Trust Series 2006-4, in which plaintiffs allege damages of not less than USD 730 million, and allege that SPS obstructed the investigation into the full extent of the defects in the mortgage pools by refusing to afford the trustee reasonable access to certain origination files; and one action brought by Home Equity Mortgage Trust Series 2006-5, in which plaintiff alleges damages of not less than USD 500 million, and alleges that SPS likely discovered DLJ’s alleged breaches of representations and warranties but did not notify the trustee of such breaches, in alleged violation of its contractual obligations. These actions are brought in the SCNY and are at early or intermediate procedural points.

As disclosed in Credit Suisse’s fourth quarter Financial Report of 2013, the following repurchase actions were dismissed with prejudice in 2013: the three consolidated actions brought by Home Equity Asset Trust 2006-5, Home Equity Asset Trust 2006-6 and Home Equity Asset Trust 2006-7 against DLJ. Those dismissals are on appeal.

Refco-related litigation

In March 2008, CSS LLC was named, along with other financial services firms, accountants, lawyers, officers, directors and controlling persons, as a defendant in an action filed in New York state court (later removed to the SDNY) by the Joint Official Liquidators of various SPhinX Funds and the trustee of the SphinX Trust, which holds claims that belonged to PlusFunds Group, Inc. (Plus-Funds), the investment manager for the SPhinX Funds. The operative amended complaint asserted claims against CSS LLC for aiding and abetting breaches of fiduciary duty and aiding and abetting fraud by Refco’s insiders in connection with Refco’s August 2004 notes offering and August 2005 initial public offering. Plaintiffs sought to recover from defendants more than USD 800 million, consisting of USD 263 million that the SphinX Managed Futures Fund, a SPhinX fund, had on deposit and lost at Refco, several hundred million dollars in alleged additional “lost enterprise” damages of PlusFunds, and pre-judgment interest. In November 2008, CSS LLC filed a motion to dismiss the amended complaint. In February 2012, the court granted in part and denied in part the motion to dismiss, which left intact part of plaintiffs’ claim for aiding and abetting fraud. In August 2012, CSS LLC filed a motion for sum-mary judgment with respect to the remaining part of plaintiffs’ aiding and abetting fraud claim. In December 2012, the court granted the motion, thus dismissing CSS LLC from the case. The court entered a final judgment dismissing the claims against CSS LLC on August 16, 2014 and, on September 16, 2014, plaintiffs appealed to the Second Circuit. On June 15, 2016, following a settlement, the Second Circuit granted a stipulation withdrawing the appeal. Thus, the entire action against CSS LLC is dismissed with prejudice.

Bank loan litigation

On January 3, 2010, the Bank and other affiliates were named as defendants in a lawsuit filed in the US District Court for the District of Idaho by current or former homeowners in four real estate developments, Tamarack Resort, Yellowstone Club, Lake Las Vegas and Ginn Sur Mer. The Bank arranged, and was the agent bank for, syndicated loans provided to borrowers affiliated with all four developments, and who have been or are now in bankruptcy or foreclosure. Plaintiffs generally allege that the Bank and other affiliates committed fraud by using an unaccepted appraisal method to overvalue the properties with the intention of having the borrowers take out loans they could not repay because it would allow the Bank and other affiliates to later push the borrowers into bankruptcy and take ownership of the properties. Plaintiffs demanded USD 24 billion in damages. Cushman & Wakefield, the appraiser for the properties at issue, is also named as a defendant. After the filing of amended complaints and motions to dismiss, the claims were significantly reduced. On September 24, 2013, the court denied the plaintiffs’ motion for class certification so the case cannot proceed as a class action. On February 5, 2015, the court granted plaintiffs’ motion for leave to file an amended complaint, adding additional individual plaintiffs. On April 13, 2015, the court granted plaintiffs’ motion for leave to add a claim for punitive damages. On November 20, 2015, the plaintiffs moved for partial summary judgment, which the defendants opposed on December 14, 2015. On December 18, 2015, the defendants filed motions for summary judgment. On July 27, 2016, the US District Court for the District of Idaho granted the defendants’ motions for summary judgment, dismissing the case with prejudice. The plaintiffs are appealing.

The Bank and other affiliates are also the subject of certain other related litigation regarding certain of these loans as well as other similar real estate developments. Such litigation includes two cases brought in Texas and New York state courts against Bank affiliates by entities related to Highland Capital Management LP (Highland). In the case in Texas state court, a jury trial was held in December 2014 on Highland’s claim for fraudulent inducement by affirmative misrepresentation and omission. A verdict was issued for the plaintiff on its claim for fraudulent inducement by affirmative misrepresentation, but the jury rejected its claim that the Bank’s affiliates had committed fraudulent inducement by omission. The Texas judge held a bench trial on Highland’s remaining claims in May and June 2015, and entered judgment in the amount of USD 287 million (including prejudgment interest) for the plaintiff on September 4, 2015. Both parties filed notices of appeal from that judgment and briefing was completed on March 10, 2017. In the case in New York state court, the court granted in part and denied in part the Bank’s summary judgment motion. Both parties appealed that decision, but the appellate court affirmed the decision in full. Bank affiliates separately sued Highland-managed funds on related trades and received a favorable judgment awarding both principal owed and prejudgment interest. Highland appealed the portion of the judgment awarding prejudgment interest, however the original decision was affirmed in its entirety. The parties subsequently agreed to settle the amount owed by the Highland-managed funds under the judgment.

Tax and securities law matters

On May 19, 2014, Credit Suisse AG entered into settlement agreements with several US regulators regarding its US cross-border matters, including the New York State Department of Financial Services (DFS). As part of the settlement, Credit Suisse AG, among other things, engaged an independent corporate monitor that reports to the DFS (a separate position from the independent consultant agreed to in the settlement with the SEC) and provides ongoing reports to various agencies. Credit Suisse AG is paying for the cost of the monitor.

Rates-related matters

Regulatory authorities in a number of jurisdictions, including the US, UK, EU and Switzerland, have for an extended period of time been conducting investigations into the setting of LIBOR and other reference rates with respect to a number of currencies, as well as the pricing of certain related derivatives. These ongoing investigations have included information requests from regulators regarding LIBOR-setting practices and reviews of the activities of various financial institutions, including the Group. The Group, which is a member of three LIBOR rate-setting panels (US Dollar LIBOR, Swiss Franc LIBOR and Euro LIBOR), is cooperating fully with these investigations. In particular, it has been reported that regulators are investigating whether financial institutions engaged in an effort to manipulate LIBOR, either individually or in concert with other institutions, in order to improve market perception of these institutions’ financial health and/or to increase the value of their proprietary trading positions. In response to regulatory inquiries, Credit Suisse commissioned a review of these issues. To date, Credit Suisse has seen no evidence to suggest that it is likely to have any material exposure in connection with these issues.

The reference rates investigations have also included information requests from regulators regarding trading activities, information sharing and the setting of benchmark rates in the foreign exchange (including electronic trading), supranational, sub-sovereign and agency (SSA) bonds, and commodities (including precious metals) markets. On March 31, 2014, the Swiss Competition Commission announced a formal investigation of numerous Swiss and international financial institutions, including the Group, in relation to the setting of exchange rates in foreign exchange trading. The Group is cooperating fully with these investigations. The investigations are ongoing and it is too soon to predict the final outcome of the investigations.

In addition, members of the US Dollar LIBOR panel, including Credit Suisse, have been named in various civil lawsuits filed in the US. All but two of these matters have been consolidated for pre-trial purposes into a multi-district litigation in the SDNY. On March 29, 2013, the court dismissed a substantial portion of the case against the panel banks, dismissing the claims under the Racketeer Influenced and Corrupt Organizations Act and the Sherman Antitrust Act, as well as all state law claims, leaving only certain claims under the Commodity Exchange Act based on LIBOR-related instruments entered into after May 30, 2008 (extended to after April 14, 2009 in a subsequent order). Plaintiffs appealed part of the decision. On May 23, 2016, the Second Circuit reversed the decision of the SDNY dismissing plaintiffs’ Sherman Antitrust Act claims and remanded the claims to the SDNY for additional briefing on the issue of whether such claims have been adequately alleged. Briefing was completed in August 2016 and, in a series of rulings between December 2016 and February 2017, the SDNY dismissed all of plaintiffs’ antitrust claims against Credit Suisse. Between April 2013 and November 2015, the SDNY has issued a number of decisions narrowing and defining the scope of the permissible claimants and claims. On August 23, 2013, the SDNY rejected plaintiffs’ requests to replead the dismissed causes of action, except for certain of plaintiffs’ state law claims, which plaintiffs asserted in amended complaints. In June 2014, the SDNY denied most of defendants’ motion to dismiss. On August 4, 2015, the SDNY ruled on certain of defendants’ additional motions to dismiss claims brought by plaintiffs not subject to the March 29, 2013 order, and dismissed some of these plaintiffs’ claims, including claims under the Racketeer Influenced and Corrupt Organizations Act and the Sherman Antitrust Act, while allowing certain Commodity Exchange Act claims, fraud, breach of contract, and unjust enrichment claims to survive. On November 3, 2015, the SDNY further dismissed purported classes brought by student loan borrowers and lending institutions and allowed certain over-the-counter plaintiffs to amend their complaints to add new plaintiffs to certain claims.

One matter that is not consolidated in the multi district litigation is also in the SDNY, and the SDNY granted the defendants’ motion to dismiss on March 31, 2015, but gave plaintiff leave to file a new pleading. On June 1, 2015, plaintiff filed a motion for leave to file a second amended complaint in the SDNY; defendants’ opposition brief was filed on July 15, 2015. Furthermore, in February 2015, various banks that served on the Swiss franc LIBOR panel, including Credit Suisse Group AG, were named in a civil putative class action lawsuit filed in the SDNY, alleging manipulation of Swiss franc LIBOR to benefit defendants’ trading positions. On June 19, 2015, the plaintiffs filed an amended complaint. On August 18, 2015, the defendants filed motions to dismiss.

Moreover, in July 2016, various banks that served on the Singapore Interbank Offered Rate (SIBOR) and Singapore Swap Offer Rate (SOR) panels, including Credit Suisse Group AG and affiliates, were named in a civil putative class action lawsuit filed in the SDNY, alleging manipulation of SIBOR and SOR to benefit defendants’ trading positions. On October 31, 2016, the plaintiffs filed an amended complaint. On November 18, 2016, defendants filed motions to dismiss.

Additionally, Credit Suisse Group AG and affiliates as well as other financial institutions are named in three pending civil class action lawsuits in the SDNY relating to the alleged manipulation of foreign exchange rates. On January 28, 2015, the court denied defendants’ motion to dismiss the original consolidated complaint brought by US-based investors and foreign plaintiffs who transacted in the US, but granted their motion to dismiss the two class actions brought by foreign-based investors. In July 2015, plaintiffs filed a second consolidated amended complaint, adding additional defendants and asserting additional claims on behalf of a second putative class of exchange investors. In August 2015, the court consolidated all foreign exchange-related actions pending in the SDNY, except one putative class action alleging violations of the US Employee Retirement Income Security Act of 1974 (ERISA) based on the same alleged conduct, which is now pending as a separate action. In November 2015, the Group and affiliates, together with other financial institutions, filed a motion to dismiss the second consolidated amended complaint. On September 20, 2016, the SDNY granted in part and denied in part such motion to dismiss. The decision reduced the size of the putative class, but allowed the primary antitrust and Commodity Exchange Act claims to survive. The Group and several affiliates, with other financial institutions, have also been named in two Canadian putative class actions, which make similar allegations. On May 19, 2016, affiliates of Credit Suisse Group AG, along with several other financial institutions, filed a motion to dismiss the putative ERISA class action, which the SDNY granted on August 23, 2016. On September 22, 2016, plaintiffs filed an appeal of that decision. The third pending matter names Credit Suisse Group AG and affiliates, as well as other financial institutions, in a putative class action filed in the SDNY on September 26, 2016, alleging manipulation of the foreign exchange market on behalf of indirect purchasers of foreign exchange instruments. Defendants moved to dismiss the indirect purchaser complaint on January 23, 2017.

Credit Suisse AG, New York Branch, and other financial institutions have also been named in a pending consolidated civil class action lawsuit relating to the alleged manipulation of the ISDAFIX rate for US dollars in the SDNY. On February 12, 2015, the class plaintiffs filed a consolidated amended class action complaint. On April 13, 2015, the defendants filed a motion to dismiss. On April 11, 2016, Credit Suisse AG, New York Branch entered into a settlement agreement with plaintiffs. On May 3, 2016, plaintiffs filed a motion for preliminary approval of the settlement, along with settlements with other financial institutions. On May 11, 2016, the SDNY preliminarily approved plaintiffs’ settlement agreements with Credit Suisse AG, New York Branch, and six other financial institutions. The settlement provides for dismissal of the case with prejudice and a settlement payment of USD 50 million by Credit Suisse. The settlements remain subject to final court approval.

CSS LLC, along with over 20 other primary dealers of US treasury securities, has been named in a number of putative civil class action complaints in the US relating to the US treasury markets. These complaints generally allege that defendants colluded to manipulate US treasury auctions, as well as the pricing of US treasury securities in the when-issued market, with impacts upon related futures and options. These actions have been consolidated into a multi-district litigation in the SDNY. Plaintiffs have not yet filed a consolidated amended complaint.

Credit Suisse Group AG and affiliates, along with other financial institutions, have been named in one consolidated putative civil class action complaint and one consolidated complaint filed by individual plaintiffs relating to interest rate swaps, alleging that dealer defendants conspired with trading platforms to prevent the development of interest rate swap exchanges. The individual lawsuits were brought by TeraExchange LLC, a swap execution facility, and affiliates, and Javelin Capital Markets LLC, a swap execution facility, and an affiliate, which claim to have suffered lost profits as a result of defendants’ alleged conspiracy. All interest rate swap actions have been consolidated in a multi-district litigation in the SDNY. Both class and individual plaintiffs filed second amended consolidated complaints on December 9, 2016, which defendants moved to dismiss on January 20, 2017.

Additionally, Credit Suisse Group AG and affiliates, along with other financial institutions and individuals, have been named in several putative class action complaints filed in the SDNY relating to SSA bonds. The complaints generally allege that defendants conspired to fix the prices of SSA bonds sold to and purchased from investors in the secondary market. These actions have been consolidated in the SDNY. Plaintiffs have not yet filed a consolidated amended complaint.

On August 16, 2016, Credit Suisse Group AG and Credit Suisse AG, along with other financial institutions, were named in a putative class action brought in the SDNY, alleging manipulation of the Australian Bank Bill Swap reference rate. Plaintiffs filed an amended complaint on December 16, 2016, which defendants moved to dismiss on February 24, 2017.

CDS-related matters

Certain Credit Suisse entities, as well as other banks and entities, were named defendants in a consolidated multi-district civil litigation proceeding in the SDNY alleging violations of antitrust law related to CDS. In September 2014, the court overseeing the litigation granted in part and denied in part the defendants’ motion to dismiss, which allowed the case to proceed to discovery. On September 30, 2015, Credit Suisse and the other defendants executed agreements with the putative class action plaintiffs to settle this litigation. On April 18, 2016, the SDNY entered an order granting final approval to the settlement agreements between the putative class action plaintiffs and Credit Suisse and the other defendants, and entering final judgment and dismissal of the parties’ respective actions.

As previously disclosed, a Credit Suisse entity received civil investigative demands from the DOJ relating to competition in credit derivatives trading, processing, clearing and information services. By a letter dated September 15, 2016, the DOJ notified Credit Suisse that it has closed its investigation.

Net new assets-related matters

On October 5, 2016, the SEC announced a settlement pursuant to which Credit Suisse agreed to pay USD 90 million and admitted that it did not adequately disclose certain practices related to the recognition of net new assets during the period from the fourth quarter of 2011 until the fourth quarter of 2012.

Alternative trading systems

Credit Suisse has been responding to inquiries from various governmental and regulatory authorities concerning the operation of its alternative trading systems, and has been cooperating with those requests. On January 31, 2016 and February 1, 2016, the SEC and NYAG, respectively, announced settlements with Credit Suisse in three such inquiries. Credit Suisse has paid, on a without admitting-or-denying basis, a total of USD 84.3 million as part of a settlement of various matters related to the operation of its US based alternative trading systems and order handling practices, and related disclosures.

Caspian Energy litigation

A lawsuit was brought against Credit Suisse International (CSI) in English court by Rosserlane Consultants Limited and Swinbrook Developments Limited. The litigation relates to the forced sale by CSI in 2008 of Caspian Energy Group LP (CEG), the vehicle through which the plaintiffs held a 51% stake in the Kyurovdag oil and gas field in Azerbaijan. CEG was sold for USD 245 million following two unsuccessful merger and acquisition processes. The plaintiffs allege that CEG should have been sold for at least USD 700 million. The trial took place at the end of 2014 and on February 20, 2015, the case was dismissed and judgment given in favor of CSI. The plaintiffs appealed the judgment. In January 2017, the Court of Appeal ruled in CSI’s favor.

ATA litigation

A lawsuit was filed on November 10, 2014 in the US District Court for the Eastern District of New York (EDNY) against a number of banks, including Credit Suisse AG, alleging claims under the United States Anti-Terrorism Act (ATA). The action alleges a conspiracy between Iran and various international financial institutions, including the defendants, in which they agreed to alter, falsify or omit information from payment messages that involved Iranian parties for the express purpose of concealing the Iranian parties’ financial activities and transactions from detection by US authorities. The complaint, brought by approximately 200 plaintiffs, alleges that this conspiracy has made it possible for Iran to transfer funds to Hezbollah and other terrorist organizations actively engaged in harming US military personnel and civilians. On July 12, 2016, plaintiffs filed a second amended complaint in the EDNY against a number of banks, including Credit Suisse AG, alleging claims under the ATA. On September 14, 2016, Credit Suisse AG and the other defendants filed motions to dismiss the plaintiffs’ second amended complaint in the EDNY. A lawsuit was filed on November 2, 2016 in the US District Court for the Southern District of Illinois (S.D. Ill.) against a number of banks, including Credit Suisse AG, alleging claims under the ATA. The complaint, brought by approximately 100 plaintiffs, makes allegations similar to the ATA action pending against Credit Suisse AG in the EDNY. On January 23, 2017, plaintiffs filed an amended complaint against the defendants in the S.D. Ill.


In late 2014, the Monte dei Paschi di Siena Foundation (Foundation) filed a lawsuit in the Civil Court of Milan, Italy seeking EUR 3 billion in damages jointly from Credit Suisse Securities (Europe) Limited (CSSEL), Banca Leonardo & Co S.p.A. and former members of the Foundation’s management committee. The lawsuit relates to the fairness opinions CSSEL and Banca Leonardo & Co S.p.A. delivered to the Foundation in connection with the EUR 9 billion acquisition of Banca Antonveneta S.p.A. by Banca Monte dei Paschi di Siena S.p.A. (BMPS) in 2008. BMPS funded the acquisition by a EUR 5 billion rights offer and the issuance of unre-deemable securities convertible into BMPS shares, in which the Foundation invested EUR 2.9 billion and EUR 490 million, respectively. The Foundation alleges that the fairness opinions were issued in the absence of key financial information. CSSEL believes that the claim lacks merit and is not supported by the available evidence.

Icelandic banks

CSSEL is defending clawback claims of USD 16 million and EUR 22 million brought by the Winding Up Committees (WUCs) of the Icelandic banks Kaupthing Bank hf and LBI hf (previously Landsbanki Islands hf) in the District Court of Reykjavik, Iceland. The claims concern the buyback by the Icelandic banks of their own bonds from CSSEL in the months prior to the Icelandic banks’ insolvency. The primary basis for the clawback is that the buybacks constituted early repayments of debt to CSSEL. In addition, CSI is defending a EUR 170 million clawback claim brought by the WUC of Kaupthing Bank hf in the District Court of Reykjavik, Iceland. The claim relates to CSI’s issuance of ten credit linked notes in 2008, which the WUC is seeking to challenge under various provisions of Icelandic insolvency law in order to claw back funds paid to CSI. The WUCs are also claiming significant penalty interest under Icelandic law in respect of both the CSSEL and CSI claims. CSSEL argues that the buyback transactions are governed by English or New York law and CSI argues that the purchase of the credit linked notes is governed by English law, neither of which provides a legal basis for such clawback actions. In October 2014, the Court of the European Free Trade Association States issued a non-binding decision supporting CSI’s and CSSEL’s position that the governing law of the transactions is relevant. Separately, CSI is pursuing a claim for USD 226 million in the District Court of Reykjavik, Iceland against Kaupthing Bank hf’s WUC in order to enforce certain security rights arising under a 2007 structured trade. CSI acquired the security rights following Kaupthing Bank hf’s insolvency in 2008. In December 2016, CSSEL, CSI and Kaupthing ehf (formerly Kaupthing Bank hf) entered into a settlement agreement and the Kaupthing related proceedings have now been concluded.

Italian Investigation

Credit Suisse AG resolved a previously-disclosed Italian investigation into alleged tax and money laundering issues through agreements to pay an administrative tax penalty and an administrative sanction. The premise of the alleged tax liability was failure to make required disclosures regarding the activities of Italian clients, and Credit Suisse AG agreed to pay a EUR 18 million administrative tax penalty to resolve these claims. As discussed in “Note 28 – Tax”, Credit Suisse AG also made a tax payment of EUR 83 million, comprising EUR 70 million of income tax, associated penalties and interest, on revenue associated with this matter, and EUR 13 million relating to tax and interest on an unrelated Italian tax matter. The premise of the alleged administrative liability was the inadequacy of historical internal controls, and Credit Suisse AG entered an agreement under Article 63 of Italian Administrative Law 231 to pay EUR 8 million in disgorgement of profits and a EUR 1 million administrative sanction. On December 14, 2016, the competent Italian judge approved this agreement under Law 231, which marked the end of the investigation by the Italian authorities. No admission of wrongdoing was required in connection with either agreement.

Customer account matters

Several clients have claimed that a former relationship manager in Switzerland had exceeded his investment authority in the management of their portfolios, resulting in excessive concentrations of certain exposures and investment losses. Credit Suisse AG is investigating the claims, as well as transactions among the clients.
Credit Suisse AG filed a criminal complaint against the former relationship manager with the Geneva Prosecutor’s Office upon which the prosecutor initiated a criminal investigation. Several clients of the former relationship manager also filed criminal complaints with the Geneva Prosecutor’s Office.

FIFA-related matters

In connection with investigations by US and Swiss government authorities into the involvement of financial institutions in the alleged bribery and corruption surrounding the Fédération Internationale de Football Association (FIFA), Credit Suisse has received inquiries from these authorities regarding its banking relationships with certain individuals and entities associated with FIFA, including but not limited to certain persons and entities named and/ or described in the May 20, 2015 indictment and the November 25, 2015 superseding indictment filed by the Eastern District of New York US Attorney’s Office. The US and Swiss authorities are investigating whether multiple financial institutions, including Credit Suisse, permitted the processing of suspicious or otherwise improper transactions, or failed to observe anti-money laundering laws and regulations, with respect to the accounts of certain persons and entities associated with FIFA. Credit Suisse is cooperating with the authorities on this matter.

External Asset Manager matter

Several clients have claimed that an external asset manager based in Geneva misappropriated funds, forged bank statements, transferred assets between client accounts at Credit Suisse as custodian to conceal losses and made investments without the authorization of those clients. Credit Suisse is investigating the claims. The Geneva Prosecutor’s Office initiated a criminal investigation against representatives of the external asset manager and a former Credit Suisse employee.

Mossack Fonseca/Israel Desk matters

Credit Suisse, along with many financial institutions, has received inquiries from governmental and regulatory authorities concerning banking relationships between financial institutions, their clients and the Panama-based law firm of Mossack Fonseca. Credit Suisse has also received governmental and regulatory inquiries concerning cross-border services provided by Credit Suisse’s Switzerland-based Israel Desk. Credit Suisse is conducting a review of these issues and has been cooperating with the authorities.

Mozambique matter

Credit Suisse is responding to requests from regulatory and enforcement authorities related to Credit Suisse’s arrangement of loan financing to Mozambique state enterprises, Proindicus S.A. and Empresa Mocambiacana de Atum S.A. (EMATUM), a distribution to private investors of loan participation notes (LPN) related to the EMATUM financing in September 2013, and Credit Suisse’s subsequent role in arranging the exchange of those LPNs for Eurobonds issued by the Republic of Mozambique. Credit Suisse has been cooperating with the authorities on this matter. 

Credit Suisse has New Clothes

  Uploaded - Wednesday, April 26, 2017

"The Emperor's New Clothes" is a short tale written by Danish author Hans Christian Andersen, about two weavers who promise an emperor a new suit of clothes that they say is invisible to those who are unfit for their positions, stupid, or incompetent. When the Emperor parades before his subjects in his new clothes, no one dares to say that they don't see any suit of clothes on him for fear that they will be seen as "unfit for their positions, stupid, or incompetent". Finally, a child cries out, "But he isn't wearing anything at all!" 
Plot: A vain Emperor who cares about nothing except wearing and displaying clothes hires two weavers who promise him the finest, best suit of clothes from a fabric invisible to anyone who is either unfit for his position or "hopelessly stupid". The Emperor's ministers cannot see the clothes themselves, but pretend that they can for fear of appearing unfit for their positions, and the Emperor does the same. Finally, the weavers report that the suit is finished, they mime dressing him, and the Emperor marches in procession before his subjects. The townsfolk play along with the pretense, not wanting to appear unfit for their positions or stupid. Then, a child in the crowd, too young to understand the desirability of keeping up the pretense, blurts out that the Emperor is wearing nothing at all, and the cry is taken up by others. 

Fat Bonuses, Caught at Crime

Arrogance has no limits. The bank's executives and most shareholders voted to give top management huge bonuses after the criminal bank was forced to pay around $8 billion in penalties. The bank will ask shareholders for $4 billion in a capital raising. I.e. they will take more investors' money. Last capital raising was for $6 billion but things went badly afterwards - those who subscribed are sorry they did.

Most of this, $3.11 billion (CHF 3.09 billion) will pay for management bonuses. Shareholders were not happy.

Even Greenpeace gatecrashed the Credit Suisse shareholder meeting.

Johann Schneider-Ammann, the Swiss Minister of Economic Affairs, claimed that it was stupidity, .... nothing to do with world market conditions, ..... recklessness which will, sooner or later, become destructive. (Original German here or English translation here). 

Press Release: Q1 Results

Credit Suisse reported "superficially good-looking" Q1 results just 2 days before the hostile AGM.  However, closer analysis showed them as a "trading miss". The press release on the web omits the most important part - the 9,275 word disclaimer - which we have copied at the end of this post. Download the shorter 16 page Press Release with just 663 words (7.15%) of the disclaimer here. I advise you to read it very carefully. If you invest without studying all 9,275 words, US Courts can hold you irresponsible even if the bank deliberately deceives you

The mountain of litigation against the bank is hidden at the end of the Annual Report: pages 374-382. To our knowledge, not one media organization has reported on this, presumably they haven't even read it. (I suspect they fell asleep around page 7).

In summary, it is apparently involved in a lot of illegal activity but has no real strategy to correct this.

Historically, the bank has severely under-reported its litigation provisions which has had the "incidental" effect of artificially improving its declared capital ratio – one of its weak points. We believe that the bank has done it again this year .

Equities trading revenue tumbled 22 percent to 722 million Swiss francs ($726 million), a bigger drop than expected and the worst decline among global investment banks to report first-quarter earnings so far. 

NNA stands for Net New Assets. NNA was up and received a top headline billing.
No mention was made that Credit Suisse was earlier caught "cooking the books" by manipulating its NNA.
Under oath, CS top management denied  the obvious manipulation. They also denied NNA was of any significant importance - but funny, now it is their top statistic?
Eventually ... over a year later .. they confessed guilt and were fined $90 million by the SEC. There was no penalty for perjury (maybe the SEC thinks perjury is "normal" for banks?)

Biggest Problem Ignored

The "elephant in the room" is that Credit Suisse has been criminally convicted, forced to pay around $8 billion in penalties, and still covers up crime inside the bank, even when it has been reported to it from multiple reliable, international, public, private and official sources. Is Bank Secrecy protecting crime?

It appears similar to the gambler who deludes himself that his luck will change.

Last AGM, it paid "mystery bonuses" to unnamed executives who were suspected of involvement in criminal conduct. Again, this year, it is proposing to pay Big Bonuses for Bad Results with no acknowledgement that bank crime was the cause they protected, ignored, covered-up and apparently rewarded.

Now, it seems, someone will have to call out: "The bank is a criminal and doesn't care". Then everyone else should join in that cry, assuming they have the common sense of a child. (See: The Emperor's New Clothes above).

Our contribution to sanity in the financial system

We have sent a formal notice to the bank's chairman, CEO and General Counsel, in case they "accidentally" overlooked this:


 This communication is formal notice of serious allegations against senior Credit Suisse management and directly impacts your personal positions.

 Dear Chairman Rohner, Mr Thiam and Mr Cerutti,

 For several years, we have formally notified you and former CEO Dougan that large scale and well-organized crime has operated in and through Credit Suisse.

 We possess overwhelming evidence supporting our allegations, but you and the bank have treated this with contempt – refusing to receive it.

 Our warnings of catastrophic consequences for shareholders have proven accurate:

The bank’s shares have lost 80% of their value

The bank has lost around $5 billion in the last two years

Despite massive injections from shareholders, the bank still needs more capital

 Yet the bank had continued to refuse to receive evidence of the misconduct which has destroyed its profitability.

 You did not reply to formal notifications sent to you dated 30 August 2013, December 4, 2014 and 6 May 2016, even though:

 By law, you are required to guarantee irreproachable business conduct

 According to: Article 3c of the Swiss Banking Act and Article 10d of the Swiss Federal Act on Stock Exchanges and Securities Trading (guarantee of irreproachable business conduct in both banking and securities businesses)

 In criminally convicting Credit Suisse, the US DOJ stated the bank:

“failed to take even the most basic steps to ensure compliance”.

Management Protected the Cover-up of Crime

I personally warned your legal department of the bank’s illegal and likely criminal acts at a face to face meeting in Zurich but was forbidden in no uncertain manner to continue that conversation.

 I offered to show documents substantiating my allegations at the meeting, but my offer was refused.

 A short time later we discovered that Credit Suisse Zurich had hacked into our website and had stolen nearly all the confidential documents stored there.

 We interpreted this as espionage intended to discern how much we knew of the criminal activity in the bank.

 We formally complained to the bank about this and other illegal acts, but were rebuffed with empty denials.

 These denials could not be believed because the bank refused our repeated offers of substantiating documentation, without which it would be impossible for the bank to disprove our allegations, especially those concerning the hacking.

 Since we possess the documents and can vouch for their veracity, for us the bank’s espionage and untruthful responses acted as a confirmation of the illegal acts, of the bank’s knowledge of them and of a ruthless disregard of the law – which was also confirmed by the DOJ.

Normal Risk Management Would Require Further Investigation

 On January 21, 2013, we formally notified Credit Suisse Senior Management of this and other serious misconduct.

 Mr Conrad Fritzsche and Dr. Reto Kühne of Credit Suisse General Counsel Division replied 4 months later on May 23, 2013 with a brief note claiming without justification there was no wrong-doing by the bank and requested that no further evidence of the alleged serious criminal misconduct be sent:


This written refusal to receive evidence of crime in the bank represents “wilful ignorance” or “deliberate blindness” of the alleged criminal misconduct

 General Counsel Division’s unsupported claim of “no wrong-doing by the bank” was followed by:

ü  the bank's criminal conviction

ü  a $2.6 billion penalty

ü  a further $5.3 billion penalty for selling “complete crap” and “[u]tter complete garbage.”

ü  a $211.9 million penalty for fraud

ü  write-down of illiquid assets by $1 billion (explanation: “There were no blind spots”)

ü  (effective) enlargement of general litigation provisions by billions of dollars,

ü  a $90 million penalty for “cooking the books”

ü  police raids on bank offices

ü  and more

 To date, there has been no serious attempt by Credit Suisse management to refute the evidence submitted to them.

 The inference we make is that Credit Suisse management have intentionally and illegally concealed criminal conduct from the authorities and from stakeholders, causing catastrophic damage for the bank’s shareholders and many customers – who are unlikely to return

Any normal risk management would require further investigation – but here the bank appears to have an overriding policy to conceal wrongdoing.

Top Management Negligence was Established

 Credit Suisse pled guilty to massive criminal conduct and was fined US$2.6 billion on May 19, 2014. That conspiracy began more than a century ago. Hundreds of employees including at manager level participated, subverted disclosure requirements, destroyed bank records and concealed transactions involving undeclared accounts.

 Top management negligence was established; point 45 of the statement of facts:

 CREDIT SUISSE executives did not take any of three steps that could have ensured compliance with U.S. law:

  1. mandating that managers transfer all U.S. accounts to CSPA, which would include declared and undeclared accounts;
  2. creating incentives for managers to do so; and
  3. penalizing managers who failed to or refused to transfer their clients to CSPA.

 After the bank had been notified of the criminal investigation, it “failed to retain key documents, allowed evidence to be lost or destroyed, and conducted a shamefully inadequate internal inquiry.”

 Alleged Misconduct Similar to Other Confirmed Misconduct

The misconduct we have alleged is similar to other criminal conduct confirmed within Credit Suisse Group.

The bank’s criminal activities have an extensive history. Here is a simplified summary:

  1. $100 Million penalty for forcing customers to pay 50% of IPO profits to bank, share market manipulation and profiteering through tie-in and laddering agreements. In most cases, the bank refused compensation to victims.
  2. $200 Million penalty for fraudulent research reports which were invented in exchange for “lucrative business”.
  3. Destroying evidence, obstructing justice and witness tampering charges in the above investigation – executive Quattrone testified he was merely following company policy in this matter.
  4. Nigerian dictator Sani Abacha deposited $660 million in mainly CS bank accounts. Swiss federal police commented: "If Credit Suisse claim that there was nothing wrong with a $200-million deposit from a 26-year-old businessman from Nigeria, the world's most corrupt country, then that's hard to believe."
  5. Chief Judge Edward Korman described (June 1, 2004) the bank’s denials of holocaust victims’ complaints as bringing to mind the theory that, “if you tell a lie big enough and keep repeating it, people will eventually come to believe it”. The judge confirmed mass destruction of documents, systematically lying, misuse of court procedures, using “frivolous and offensive objections”, looting of accounts of holocaust victims, lying to court, stonewalling.
  6. Holocaust victims purchased various types of insurance from Credit Suisse-Winterthur e.g. life insurance for which their heirs were refused payments.
  7. Enron bankruptcy: Credit Suisse and other banks hid billions in debt and made failing ventures appear profitable. In most cases, the bank refused compensation to victims.
  8. Market manipulation in India – it was convicted and suspended from securities trading for 2 years.
  9. Credit Suisse helped Parmalat hide the $10 billion fraud that led to its bankruptcy filing. It paid 3 settlements: $25 million, US$266.8 million and $500 million with UBS. 
  10. Swissair CHF17 billion bankruptcy: When former Credit Suisse CEO Lukas Mühlemann was prosecuted for the collapse of SwissAir, he refused to answer any questions. The Swiss judge found him not guilty and he then became an advisor for the super rich. His personal fortune was estimated in 2006 to be CHF 100 million.
  11. Credit Suisse sold $3 billion of worthless National Century's securities but refused compensation to victims.
  12. Credit Suisse’s criminal conviction in Japan: its activities “deeply undermine the soundness of the Japanese financial markets and financial institutions”; its offences were “planned and systematic” and “involved the entire organization….”; obstruction of criminal investigations and lying to the Japanese regulator; evidence destruction, concealing documents and removing documents offsite; systematically falsifying documentation; market manipulation; conducting business for which it did not have a license.
  13. Money laundering to finance the nuclear weapons and missile program of the world’s foremost state sponsor of terrorism and member of the “axis of evil” (Iran) by systematically stripping the identities of Iranian banks from transfers destined for the Iranian Atomic Energy and Aerospace Organizations. This criminal support of terrorism used a conspiracy between three supposedly independent wholly owned entities domiciled in the UK, Switzerland and USA. The US Attorney General complained: “the criminal misconduct perpetrated by Credit Suisse in this case is simply astounding”; “created a 'how-to' book on committing a crime”; “robbed our system of the legitimacy that is fundamental to its success”. The bank paid $536million in penalties.
  14. On May 19, 2014, Credit Suisse pled guilty to criminal conduct and was fined US$2.6 billion. Secret offshore accounts were held in the names of sham entities and foundations. The bank failed to take even the most basic steps to ensure compliance.
  15. Two months later, Credit Suisse was caught again – with US client Horsky.
  16. In July 2010, 150 police raided every Credit Suisse office in Germany. More raids took place in February 2011. A German Court publicly confirmed that Credit Suisse top management promoted tax evasion crimes during this period (on November 2011). The Court imposed a penalty of €149 million penalty after finding that:
    1. Credit Suisse staff training specifically targeted those customers intending to invest untaxed income. I.e., the bank’s training was directed at committing – not preventing – crimes. §6.
    2. Bogus life insurance policies were used in a sophisticated tax fraud scheme. §5.
    3. A sophisticated conspiracy existed between the parent and subsidiary to conceal potentially embarrassing data. Thus both parent and subsidiary were partners in crime. §§5 & 7.
    4. Top management knowingly promoted the crimes. §11.
  17. Two years later, on February 26, 2014, Credit Suisse executives led by CEO Dougan and General Counsel Romeo Cerutti denied knowledge of this massive tax fraud scheme in sworn testimony to the US Senate Investigations Committee. Their testimony is not believable – the conviction documents were publicly available, and they surely noticed paying the €149 million penalty.
  18. During this sworn testimony, the bank also denied “cooking its books” to mislead investors, despite being confronted with overwhelming evidence that it did just that. Eventually, in October 2016 it admitted guilt and paid a $90 million penalty.
  19. In January 2015, police raided Credit Suisse’s Italian offices. Eventually, a bogus insurance scheme similar to the German one above was exposed (“recycling crime?”) The bank paid a penalty of 100 million euros in October 2016.
  20. On 31 March 2017, 5 countries coordinated raids on Credit Suisse offices in relation to alleged tax fraud schemes.
  21. In December 2016, Credit Suisse incurred a $5.3 billion penalty for fraudulently marketing tens of billions of dollars of almost worthless mortgage backed securities.
  22. Judge Tillery ordered Credit Suisse to pay $211.9 million to Highland Capital Management in 2015 regarding fraud in real estate financing transactions. 
  23. Billions of dollars of claims are still being litigated which have the potential to destabilize the bank, or worse if financial volatility deteriorates in 2017-19
  24. And other cases too voluminous to mention

This letter removes ignorance as a possible excuse for inaction or inadequate action.

 This notification before the AGM gives you the opportunity to reply before the AGM.

 Your reply or lack of reply will be sent to shareholder representatives with whom we have correspondence.

Yours sincerely

Dr Paul Morjanoff.

Press Release Main Points

The bank will raise capital by way of a fully underwritten rights offering for which the net proceeds are expected to amount to approximately CHF 4 billion and retain full ownership of its Swiss banking division.

Group reported pre-tax income of CHF 670 million and Group adjusted* pre-tax income of CHF 889 million. On an adjusted* basis, our five operating divisions delivered pre-tax income of CHF 1.4 billion, partially offset by an adjusted* SRU pre-tax loss of USD 502 million. Continued strong performance in Wealth Management, with NNA across all divisions up 24% at CHF 12 billion.

Bank's Disclaimer (there is a cartoon at the end):

Cautionary statement regarding forward-looking information
This media release contains statements that constitute forward-looking statements. In addition, in the future we, and others on our behalf, may make statements that constitute forward-looking statements. Such forward-looking statements may include, without limitation, statements relating to the following:
  • our plans, objectives or goals;
  • our future economic performance or prospects;
  • the potential effect on our future performance of certain contingencies; and
  • assumptions underlying any such statements.
  • Words such as “believes,” “anticipates,” “expects,” “intends” and “plans” and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. We do not intend to update these forward-looking statements except as may be required by applicable securities laws.
  • By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that predictions, forecasts, projections and other outcomes described or implied in forward-looking statements will not be achieved. We caution you that a number of important factors could cause results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements. These factors include:
  • the ability to maintain sufficient liquidity and access capital markets;
  • market volatility and interest rate fluctuations and developments affecting interest rate levels;
  • the strength of the global economy in general and the strength of the economies of the countries in which we conduct our operations, in particular the risk of continued slow economic recovery or downturn in the US or other developed countries or in emerging markets in 2017 and beyond;
  • the direct and indirect impacts of deterioration or slow recovery in residential and commercial real estate markets;
  • adverse rating actions by credit rating agencies in respect of us, sovereign issuers, structured credit products or other credit-related exposures;
  • the ability to achieve our strategic objectives, including cost efficiency, net new asset, pre-tax income/(loss), capital ratios and return on regulatory capital, leverage exposure threshold,  risk-weighted assets threshold and other targets and ambitions;
  • the ability of counterparties to meet their obligations to us;
  • the effects of, and changes in, fiscal, monetary, exchange rate, trade and tax policies, as well as currency fluctuations;
  • political and social developments, including war, civil unrest or terrorist activity;
  • the possibility of foreign exchange controls, expropriation, nationalization or confiscation of assets in countries in which we conduct our operations;
  • operational factors such as systems failure, human error, or the failure to implement procedures properly;
  • the risk of cyberattacks on our business or operations;
  • actions taken by regulators with respect to our business and practices and possible resulting changes to our business organization, practices and policies in countries in which we conduct our operations;
  • the effects of changes in laws, regulations or accounting policies or practices in countries in which we conduct our operations;
  • the potential effects of proposed changes in our legal entity structure;
  • competition or changes in our competitive position in geographic and business areas in which we conduct our operations;
  • the ability to retain and recruit qualified personnel;
  • the ability to maintain our reputation and promote our brand;
  • the ability to increase market share and control expenses;
  • technological changes;
  • the timely development and acceptance of our new products and services and the perceived overall value of these products and services by users;
  • acquisitions, including the ability to integrate acquired businesses successfully, and divestitures, including the ability to sell non-core assets;
  • the adverse resolution of litigation, regulatory proceedings and other contingencies; and
  • other unforeseen or unexpected events and our success at managing these and the risks involved in the foregoing.
We caution you that the foregoing list of important factors is not exclusive. When evaluating forward-looking statements, you should carefully consider the foregoing factors and other uncertainties and events, including the information set forth in “Risk factors” pages 42 - 50 in I – Information on the company in our Annual Report 2016.

Risk factors: Pages 42 - 50 in the Annual Report 2016
Our businesses are exposed to a variety of risks that could adversely affect our results of operations and financial condition, including, among others, those described below.
Liquidity, or ready access to funds, is essential to our business, particularly our investment banking businesses. We seek to maintain available liquidity to meet our obligations in a stressed liquidity environment.
u Refer to “Liquidity and funding management” in III – Treasury, Risk, Balance sheet and Off-balance sheet for information on our liquidity management.
Our liquidity could be impaired if we were unable to access the capital markets or sell our assets, and we expect our liquidity costs to increase
Our ability to borrow on a secured or unsecured basis and the cost of doing so can be affected by increases in interest rates or credit spreads, the availability of credit, regulatory requirements relating to liquidity or the market perceptions of risk relating to us, certain of our counterparties or the banking sector as a whole, including our perceived or actual creditworthiness. An inability to obtain financing in the unsecured long-term or short-term debt capital markets, or to access the secured lending markets, could have a substantial adverse effect on our liquidity. In challenging credit markets, our funding costs may increase or we may be unable to raise funds to support or expand our businesses, adversely affecting our results of operations. Following the financial crisis in 2008 and 2009, our costs of liquidity have been significant, and we expect to incur additional costs as a result of regulatory requirements for increased liquidity and the continued challenging economic environment in Europe, the US, Asia and elsewhere.
If we are unable to raise needed funds in the capital markets (including through offerings of equity and regulatory capital securities), we may need to liquidate unencumbered assets to meet our liabilities. In a time of reduced liquidity, we may be unable to sell some of our assets, or we may need to sell assets at depressed prices, which in either case could adversely affect our results of operations and financial condition.
Our businesses rely significantly on our deposit base for funding
Our businesses benefit from short-term funding sources, including primarily demand deposits, inter-bank loans, time deposits and cash bonds. Although deposits have been, over time, a stable source of funding, this may not continue. In that case, our liquidity position could be adversely affected and we might be unable to meet deposit withdrawals on demand or at their contractual maturity, to repay borrowings as they mature or to fund new loans, investments and businesses.

Changes in our ratings may adversely affect our business 
Ratings are assigned by rating agencies. They may lower, indicate their intention to lower or withdraw their ratings at any time. The major rating agencies remain focused on the financial services industry, particularly on uncertainties as to whether firms that pose systemic risk would receive government or central bank support in a financial or credit crisis, and on such firms’ potential vulnerability to market sentiment and confidence, particularly during periods of severe economic stress. In January 2016, Moody’s Investors Service lowered its senior long-term debt ratings of Credit Suisse AG and Credit Suisse Group AG by one notch. Although Moody’s Investors Service upgraded the senior long-term debt ratings of Credit Suisse AG and Credit Suisse Group AG by one notch in December 2016, future downgrades by Moody’s Investors Service or any other rating agency of ratings assigned to Credit Suisse Group AG or Credit Suisse AG are possible. Any downgrades in our assigned ratings, including in particular our credit ratings, could increase our borrowing costs, limit our access to capital markets, increase our cost of capital and adversely affect the ability of our businesses to sell or market their products, engage in business transactions – particularly longer-term and q derivatives transactions – and retain our clients.
We may incur significant losses on our trading and investment activities due to market fluctuations and volatility 
Although we continued to strive to reduce our balance sheet and made significant progress in implementing our strategy in 2016, we continue to maintain large trading and investment positions and hedges in the debt, currency and equity markets, and in private equity, hedge funds, real estate and other assets. These positions could be adversely affected by volatility in financial and other markets, that is, the degree to which prices fluctuate over a particular period in a particular market, regardless of market levels. To the extent that we own assets, or have net long positions, in any of those markets, a downturn in those markets could result in losses from a decline in the value of our net long positions. Conversely, to the extent that we have sold assets that we do not own or have net short positions in any of those markets, an upturn in those markets could expose us to potentially significant losses as we attempt to cover our net short positions by acquiring assets in a rising market. Market fluctuations, downturns and volatility can adversely affect the q fair value of our positions and our results of operations. Adverse market or economic conditions or trends have caused, and in the future may cause, a significant decline in our net revenues and profitability.

Our businesses are subject to the risk of loss from adverse market conditions and unfavorable economic, monetary, political, legal and other developments in the countries we operate in around the world
As a global financial services company, our businesses are materially affected by conditions in the financial markets and economic conditions generally in Europe, the US, Asia and elsewhere around the world. The recovery from the economic crisis of 2008 and 2009 continues to be sluggish in several key developed markets. The European sovereign debt crisis as well as US debt levels and the federal budget process have not been permanently resolved. In addition, significantly higher market volatility, low commodity prices, and concerns about emerging markets, in particular slower economic growth in China, have recently affected financial markets. Our financial condition and results of operations could be materially adversely affected if these conditions do not improve, or if they stagnate or worsen. Further, various countries in which we operate or invest have experienced severe economic disruptions particular to that country or region, including extreme currency fluctuations, high inflation, or low or negative growth, among other negative conditions. Concerns about weaknesses in the economic and fiscal condition of certain European countries have continued, especially with regard to how such weaknesses might affect other economies as well as financial institutions (including us) which lent funds to or did business with or in those countries. For example, sanctions have been imposed on certain individuals and companies in Russia.
Continued concern about European economies, including the refugee crisis, and political uncertainty, including in relation to the UK’s withdrawal from the EU, could cause disruptions in market conditions in Europe and around the world. On June 23, 2016, the UK voted through a referendum in favor of leaving the EU. UK Prime Minister Theresa May confirmed that the government would initiate the two-year process of negotiations for withdrawal from the EU by March 2017, with an expected date of withdrawal in early 2019. The results of this negotiation and the macroeconomic impact of this decision are difficult to predict and are expected to remain uncertain for a prolonged period. Among the significant global implications of the referendum was the increased uncertainty concerning a potentially more persistent and widespread imposition by central banks of negative interest rate policies. We cannot accurately predict the impact of the UK leaving the EU on Credit Suisse and such impact may negatively affect our future results of operations and financial condition. The environment of political uncertainty in continental Europe may also affect our business. The increased popularity of nationalistic sentiments and the upcoming elections in France and Germany may result in significant shifts in national policy and a move away from European integration and the eurozone. Similar uncertainties exist regarding the impact and potential effects of the new US presidential administration.
Economic disruption in other countries, even in countries in which we do not currently conduct business or have operations, could adversely affect our businesses and results. Adverse market  and economic conditions continue to create a challenging operating environment for financial services companies. In particular, the impact of interest and currency exchange rates, the risk of geopolitical events, fluctuations in commodity prices and concerns about European stagnation have affected financial markets and the economy. In recent years, the low interest rate environment has adversely affected our net interest income and the value of our trading and non-trading fixed income portfolios. Future changes in interest rates, including increasing interest rates or changes in the current negative short-term interest rates in our home market, could adversely affect our businesses and results. In addition, movements in equity markets have affected the value of our trading and non-trading equity portfolios, while the historical strength of the Swiss franc has adversely affected our revenues and net income. Further, diverging monetary policies among the major economies in which we operate, in particular among the Fed, ECB and SNB, may adversely affect our results.
Such adverse market or economic conditions may reduce the number and size of investment banking transactions in which we provide underwriting, mergers and acquisitions advice or other services and, therefore, may adversely affect our financial advisory and underwriting fees. Such conditions may adversely affect the types and volumes of securities trades that we execute for customers and may adversely affect the net revenues we receive from commissions and spreads. In addition, several of our businesses engage in transactions with, or trade in obligations of, governmental entities, including supranational, national, state, provincial, municipal and local authorities. These activities can expose us to enhanced sovereign, credit-related, operational and reputational risks, including the risks that a governmental entity may default on or restructure its obligations or may claim that actions taken by government officials were beyond the legal authority of those officials, which could adversely affect our financial condition and results of operations.
Unfavorable market or economic conditions have affected our businesses over the last years, including the low interest rate environment, continued cautious investor behavior and changes in market structure, particularly in our macro businesses. These negative factors have been reflected in lower commissions and fees from our client-flow sales and trading and asset management activities, including commissions and fees that are based on the value of our clients’ portfolios. Investment performance that is below that of competitors or asset management benchmarks could result in a decline in assets under management and related fees and make it harder to attract new clients. There has been a fundamental shift in client demand away from more complex products and significant client deleveraging, and our results of operations related to private banking and asset management activities have been and could continue to be adversely affected as long as this continues.
Adverse market or economic conditions have also negatively affected our private equity investments since, if a private equity investment substantially declines in value, we may not receive any increased share of the income and gains from such investment (to which we are entitled in certain cases when the return on such investment exceeds certain threshold returns), may be obligated to return to investors previously received excess carried interest payments and may lose our pro rata share of the capital invested. In addition, it could become more difficult to dispose of the investment, as even investments that are performing well may prove difficult to exit.
In addition to the macroeconomic factors discussed above, other events beyond our control, including terrorist attacks, military conflicts, economic or political sanctions, disease pandemics, political unrest or natural disasters could have a material adverse effect on economic and market conditions, market volatility and financial activity, with a potential related effect on our businesses and results.
We may incur significant losses in the real estate sector
We finance and acquire principal positions in a number of real estate and real estate-related products, primarily for clients, and originate loans secured by commercial and residential properties. As of December 31, 2016, our real estate loans as reported to the SNB totaled approximately CHF 143 billion. We also securitize and trade in commercial and residential real estate and real estate-related whole loans, mortgages, and other real estate and commercial assets and products, including q CMBS and q RMBS. Our real estate-related businesses and risk exposures could be adversely affected by any downturn in real estate markets, other sectors and the economy as a whole. In particular, the risk of potential price corrections in the real estate market in certain areas of Switzerland could have a material adverse effect on our real estate-related businesses.
Holding large and concentrated positions may expose us to large losses
Concentrations of risk could increase losses, given that we have sizeable loans to, and securities holdings in, certain customers, industries or countries. Decreasing economic growth in any sector in which we make significant commitments, for example, through underwriting, lending or advisory services, could also negatively affect our net revenues.
We have significant risk concentration in the financial services industry as a result of the large volume of transactions we routinely conduct with broker-dealers, banks, funds and other financial institutions, and in the ordinary conduct of our business we may be subject to risk concentration with a particular counterparty. We, like other financial institutions, continue to adapt our practices and operations in consultation with our regulators to better address an evolving understanding of our exposure to, and management of, systemic risk and risk concentration to financial institutions. Regulators continue to focus on these risks, and there are numerous new regulations and government proposals, and significant ongoing regulatory uncertainty, about how best to address them. There can be no assurance that the changes in our industry, operations, practices and regulation will be effective in managing this risk.
4 Refer to “Regulation and supervision” for further information.
Risk concentration may cause us to suffer losses even when economic and market conditions are generally favorable for others in our industry.
Our hedging strategies may not prevent losses
If any of the variety of instruments and strategies we use to hedge our exposure to various types of risk in our businesses is not effective, we may incur losses. We may be unable to purchase hedges or be only partially hedged, or our hedging strategies may not be fully effective in mitigating our risk exposure in all market environments or against all types of risk.
Market risk may increase the other risks that we face
In addition to the potentially adverse effects on our businesses described above, market risk could exacerbate the other risks that we face. For example, if we were to incur substantial trading losses, our need for liquidity could rise sharply while our access to liquidity could be impaired. In conjunction with another market downturn, our customers and counterparties could also incur substantial losses of their own, thereby weakening their financial condition and increasing our credit and counterparty risk exposure to them.
We may suffer significant losses from our credit exposures Our businesses are subject to the fundamental risk that borrowers and other counterparties will be unable to perform their obligations. Our credit exposures exist across a wide range of transactions that we engage in with a large number of clients and counterparties, including lending relationships, commitments and letters of credit, as well as q derivative, currency exchange and other transactions. Our exposure to credit risk can be exacerbated by adverse economic or market trends, as well as increased volatility in relevant markets or instruments. In addition, disruptions in the liquidity or transparency of the financial markets may result in our inability to sell, syndicate or realize the value of our positions, thereby leading to increased concentrations. Any inability to reduce these positions may not only increase the market and credit risks associated with such positions, but also increase the level of q risk-weighted assets on our balance sheet, thereby increasing our capital requirements, all of which could adversely affect our businesses.
4 Refer to “Credit risk” in III – Treasury, Risk, Balance sheet and Off-balance sheet – Risk management – Risk coverage and management for information on management of credit risk.
Our regular review of the creditworthiness of clients and counterparties for credit losses does not depend on the accounting treatment of the asset or commitment. Changes in creditworthiness of loans and loan commitments that are q fair valued are reflected in trading revenues.
Management’s determination of the provision for loan losses is subject to significant judgment. Our banking businesses may need to increase their provisions for loan losses or may record losses in excess of the previously determined provisions if our original estimates of loss prove inadequate, which could have a material adverse effect on our results of operations.
4 Refer to “Credit risk” in III – Treasury, Risk, Balance sheet and Off-balance sheet – Risk management – Risk coverage and management and “Note 1 – Summary of significant accounting policies”, “Note 10 – Provision for credit losses” and “Note 19 – Loans, allowance for loan losses and credit quality” in V – Consolidated financial statements – Credit Suisse Group for information on provisions for loan losses and related risk mitigation.
Under certain circumstances, we may assume long-term credit risk, extend credit against illiquid collateral and price derivative instruments aggressively based on the credit risks that we take. As a result of these risks, our capital and liquidity requirements may continue to increase.
Defaults by one or more large financial institutions could adversely affect financial markets generally and us
Concerns or even rumors about or a default by one institution could lead to significant liquidity problems, losses or defaults by other institutions because the commercial soundness of many financial institutions may be closely related as a result of credit, trading, clearing or other relationships between institutions. This risk is sometimes referred to as systemic risk. Concerns about defaults by and failures of many financial institutions, particularly those with significant exposure to the eurozone, continued in 2016 and could continue to lead to losses or defaults by financial institutions and financial intermediaries with which we interact on a daily basis, such as clearing agencies, clearing houses, banks, securities firms and exchanges. Our credit risk exposure will also increase if the collateral we hold cannot be realized or can only be liquidated at prices insufficient to cover the full amount of exposure.
The information that we use to manage our credit risk may be inaccurate or incomplete
Although we regularly review our credit exposure to specific clients and counterparties and to specific industries, countries and regions that we believe may present credit concerns, default risk may arise from events or circumstances that are difficult to foresee or detect, such as fraud. We may also lack correct and complete information with respect to the credit or trading risks of a counterparty or risk associated with specific industries, countries and regions or misinterpret such information that is received or otherwise incorrectly assess a given risk situation. Additionally, there can be no assurance that measures instituted to manage such risk will be effective in all instances.
We may not achieve all of the expected benefits of our strategic initiatives
In October 2015, we announced a comprehensive new strategic direction, structure and organization of the Group, which we updated in 2016. Our ability to implement our strategic direction, structure and organization is based on a number of key assumptions regarding the future economic environment, the economic growth of certain geographic regions, the regulatory landscape, our ability to meet certain ambitions, goals and targets, anticipated interest rates and central bank action, among other things. If any of these assumptions (including but not limited to our ability to meet certain ambitions, goals and targets) prove inaccurate in whole or in part, our ability to achieve some or all of the expected benefits of this strategy could be limited, including our ability to meet our stated financial objectives, keep related restructuring charges within the limits currently expected and retain key employees. Factors beyond our control, including but not limited to the market and economic conditions, changes in laws, rules or regulations, execution risk related to the implementation of our strategy and other challenges and risk factors discussed in this report, could limit our ability to achieve some or all of the expected benefits of this strategy. The breadth of the changes that we announced increases the execution risk of our strategy as we continue to work to change the strategic direction of the Group. If we are unable to implement this strategy successfully in whole or in part or should the components of the strategy that are implemented fail to produce the expected benefits, our financial results and our share price may be materially and adversely affected.
4 Refer to “Strategy” for further information on our strategic direction.
Additionally, part of our strategy involves a change in focus within certain areas of our business, which may have unanticipated negative effects in other areas of the business and may result in an adverse effect on our business as a whole.
The implementation of our strategy may increase our exposure to certain risks, including but not limited to, credit risks, market risks, operational risks and regulatory risks. We also seek to achieve certain cost savings, which may or may not be successful. We have announced our intention, market conditions permitting, to conduct an initial public offering by the end of 2017 of a minority stake of Credit Suisse (Schweiz) AG, which is an indirect subsidiary of Credit Suisse Group AG that started its business operations as an independent Swiss bank in November 2016. Any such initial public offering would be subject to, among other things, all necessary approvals and would be intended to generate additional capital for Credit Suisse AG or Credit Suisse (Schweiz) AG. There is no guarantee that we will be able to conduct such an initial public offering by such time, in such form or at all. Finally, changes to the organizational structure of our business, as well as changes in personnel and management, may lead to temporary instability of our operations.
In addition, acquisitions and other similar transactions we undertake as part of our strategy subject us to certain risks. Even though we review the records of companies we plan to acquire, it is generally not feasible for us to review all such records in detail. Even an in-depth review of records may not reveal existing or potential problems or permit us to become familiar enough with a business to assess fully its capabilities and deficiencies. As a result, we may assume unanticipated liabilities (including legal and compliance issues), or an acquired business may not perform as well as expected. We also face the risk that we will not be able to integrate acquisitions into our existing operations effectively as a result of, among other things, differing procedures, business practices and technology systems, as well as difficulties in adapting an acquired company into our organizational structure. We face the risk that the returns on acquisitions will not support the expenditures or indebtedness incurred to acquire such businesses or the capital expenditures needed to develop such businesses. We also face the risk that unsuccessful acquisitions will ultimately result in our having to write down or write off any goodwill associated with such transactions. For example, our results for the fourth quarter of 2015 included a goodwill impairment charge of CHF 3,797 million, the most significant component of which arose from the acquisition of Donaldson, Lufkin & Jenrette Inc. in 2000. We continue to have a significant amount of goodwill relating to this and other transactions recorded on our balance sheet that could result in additional goodwill impairment charges.
We may also seek to engage in new joint ventures (within the Group and with external parties) and strategic alliances. Although we endeavor to identify appropriate partners, our joint venture efforts may prove unsuccessful or may not justify our investment and other commitments.
We have announced a program to evolve our legal entity
structure and cannot predict its final form or potential effects In 2013, we announced key components of our program to evolve our legal entity structure. The execution of the program evolving the Group’s legal entity structure to meet developing and future regulatory requirements has continued to progress and we have reached a number of significant milestones over the course of the year. This program remains subject to a number of uncertainties that may affect its feasibility, scope and timing. In addition, significant legal and regulatory changes affecting us and our operations may require us to make further changes in our legal structure. The implementation of these changes will require significant time and resources and may potentially increase operational, capital, funding and tax costs as well as our counterparties’ credit risk.
4 Refer to “Evolution of legal entity structure” in Strategy for further information on our legal entity structure.
We make estimates and valuations that affect our reported results, including measuring the q fair value of certain assets and liabilities, establishing provisions for contingencies and losses for loans, litigation and regulatory proceedings, accounting for goodwill and intangible asset impairments, evaluating our ability to realize deferred tax assets, valuing equity-based compensation awards, modeling our risk exposure and calculating expenses and liabilities associated with our pension plans. These estimates are based upon judgment and available information, and our actual results may differ materially from these estimates.
4 Refer to “Critical accounting estimates” in II – Operating and financial review and “Note 1 – Summary of significant accounting policies” in V – Consolidated financial statements – Credit Suisse Group for information on these estimates and valuations.
Our estimates and valuations rely on models and processes to predict economic conditions and market or other events that might affect the ability of counterparties to perform their obligations to us or impact the value of assets. To the extent our models and processes become less predictive due to unforeseen market conditions, illiquidity or volatility, our ability to make accurate estimates and valuations could be adversely affected.
We enter into transactions with special purpose entities (SPEs) in our normal course of business, and certain SPEs with which we transact business are not consolidated and their assets and liabilities are off-balance sheet. We may have to exercise significant management judgment in applying relevant accounting consolidation standards, either initially or after the occurrence of certain events that may require us to reassess whether consolidation is required. Accounting standards relating to consolidation, and their interpretation, have changed and may continue to change. If we are required to consolidate an SPE, its assets and liabilities would be recorded on our consolidated balance sheets and we would recognize related gains and losses in our consolidated statements of operations, and this could have an adverse impact on our results of operations and capital and leverage ratios.
4 Refer to “Off-balance sheet” in III – Treasury, Risk, Balance sheet and Off-balance sheet – Balance sheet, off-balance sheet and other contractual obligations for information on our transactions with and commitments to SPEs.
Country risks may increase market and credit risks we face Country, regional and political risks are components of market and credit risk. Financial markets and economic conditions generally have been and may in the future be materially affected by such risks. Economic or political pressures in a country or region, including those arising from local market disruptions, currency crises, monetary controls or other factors, may adversely affect the ability of clients or counterparties located in that country or region to obtain foreign currency or credit and, therefore, to perform their obligations to us, which in turn may have an adverse impact on our results of operations.
We may face significant losses in emerging markets
A key element of our strategy is to scale up our private banking businesses in emerging market countries. Our implementation of that strategy will necessarily increase our existing exposure to economic instability in those countries. We monitor these risks, seek diversity in the sectors in which we invest and emphasize client-driven business. Our efforts at limiting emerging market risk, however, may not always succeed. In addition, various emerging market countries, in particular China and Brazil during 2016, have experienced and may continue to experience severe economic and financial disruptions or slower economic growth than in prior years. The possible effects of any such disruptions may include an adverse impact on our businesses and increased volatility in financial markets generally.
Currency fluctuations may adversely affect our results of operations
We are exposed to risk from fluctuations in exchange rates for currencies, particularly the US dollar. In particular, a substantial portion of our assets and liabilities are denominated in currencies other than the Swiss franc, which is the primary currency of our financial reporting. Our capital is also stated in Swiss francs, and we do not fully hedge our capital position against changes in currency exchange rates. Despite some weakening, the Swiss franc remained strong against the US dollar and euro in 2016.
As we incur a significant part of our expenses in Swiss francs while we generate a large proportion of our revenues in other currencies, our earnings are sensitive to changes in the exchange rates between the Swiss franc and other major currencies. Although we have implemented a number of measures designed to offset the impact of exchange rate fluctuations on our results of operations, the appreciation of the Swiss franc in particular and exchange rate volatility in general have had an adverse impact on our results of operations and capital position in recent years and may have such an effect in the future.
We are exposed to a wide variety of operational risks,
including information technology risk
Operational risk is the risk of financial loss arising from inadequate or failed internal processes, people or systems or from external events. In general, although we have business continuity plans, our businesses face a wide variety of operational risks, including technology risk that stems from dependencies on information technology, third-party suppliers and the telecommunications infrastructure as well as from the interconnectivity of multiple financial institutions with central agents, exchanges and clearing houses. As a global financial services company, we rely heavily on our financial, accounting and other data processing systems, which are varied and complex. Our business depends on our ability to process a large volume of diverse and complex transactions, including q derivatives transactions, which have increased in volume and complexity. We are exposed to operational risk arising from errors made in the execution, confirmation or settlement of transactions or from transactions not being properly recorded or accounted for. Regulatory requirements in this area have increased and are expected to increase further.
Information security, data confidentiality and integrity are of critical importance to our businesses. Despite our wide array of security measures to protect the confidentiality, integrity and availability of our systems and information, it is not always possible to anticipate the evolving threat landscape and mitigate all risks to our systems and information. We could also be affected by risks to the systems and information of clients, vendors, service providers, counterparties and other third parties. In addition, we may introduce new products or services or change processes, resulting in new operational risk that we may not fully appreciate or identify.
These threats may derive from human error, fraud or malice, or may result from accidental technological failure. There may also be attempts to fraudulently induce employees, clients, third parties or other users of our systems to disclose sensitive information in order to gain access to our data or that of our clients.
Given our global footprint and the high volume of transactions we process, the large number of clients, partners and counterparties with which we do business, our growing use of digital, mobile and internet-based services, and the increasing sophistication of cyber-attacks, a cyber-attack could occur without detection for an extended period of time. In addition, we expect that any investigation of a cyber-attack will be inherently unpredictable and it may take time before any investigation is complete. During such time, we may not know the extent of the harm or how best to remediate it and certain errors or actions may be repeated or compounded before they are discovered and rectified, all or any of which would further increase the costs and consequences of a cyber-attack.
If any of our systems do not operate properly or are compromised as a result of cyber-attacks, security breaches, unauthorized access, loss or destruction of data, unavailability of service, computer viruses or other events that could have an adverse security impact, we could be subject to litigation or suffer financial loss not covered by insurance, a disruption of our businesses, liability to our clients, regulatory intervention or reputational damage. Any such event could also require us to expend significant additional resources to modify our protective measures or to investigate and remediate vulnerabilities or other exposures.
We may suffer losses due to employee misconduct
Our businesses are exposed to risk from potential non-compliance with policies or regulations, employee misconduct or negligence and fraud, which could result in civil or criminal investigations and charges, regulatory sanctions and serious reputational or financial harm. In recent years, a number of multinational financial institutions have suffered material losses due to, for example, the actions of traders performing unauthorized trades or other employee misconduct. It is not always possible to deter employee misconduct and the precautions we take to prevent and detect this activity may not always be effective.
We have risk management procedures and policies designed to manage our risk. These techniques and policies, however, may not always be effective, particularly in highly volatile markets. We continue to adapt our risk management techniques, in particular q value-at-risk and economic capital, which rely on historical data, to reflect changes in the financial and credit markets. No risk management procedures can anticipate every market development or event, and our risk management procedures and hedging strategies, and the judgments behind them, may not fully mitigate our risk exposure in all markets or against all types of risk.
u Refer to “Risk management” in III – Treasury, Risk, Balance sheet and Off-balance sheet for information on our risk management.
Our exposure to legal liability is significant
We face significant legal risks in our businesses, and the volume and amount of damages claimed in litigation, regulatory proceedings and other adversarial proceedings against financial services firms continue to increase in many of the principal markets in which we operate.
We and our subsidiaries are subject to a number of material legal proceedings, regulatory actions and investigations, and an adverse result in one or more of these proceedings could have a material adverse effect on our operating results for any particular period, depending, in part, upon our results for such period.
4 Refer to “Note 39 – Litigation” in V – Consolidated financial statements – Credit Suisse Group for information relating to these and other legal and regulatory proceedings involving our investment banking and other businesses.
It is inherently difficult to predict the outcome of many of the legal, regulatory and other adversarial proceedings involving our businesses, particularly those cases in which the matters are brought on behalf of various classes of claimants, seek damages of unspecified or indeterminate amounts or involve novel legal claims. Management is required to establish, increase or release reserves for losses that are probable and reasonably estimable in connection with these matters.
4 Refer to “Critical accounting estimates” in II – Operating and financial review and “Note 1 – Summary of significant accounting policies” in V – Consolidated financial statements – Credit Suisse Group for more information.
Regulatory changes may adversely affect our business and ability to execute our strategic plans
As a participant in the financial services industry, we are subject to extensive regulation by governmental agencies, supervisory authorities and self-regulatory organizations in Switzerland, the EU, the UK, the US and other jurisdictions in which we operate around the world. Such regulation is increasingly more extensive and complex and, in recent years, costs related to our compliance with these requirements and the penalties and fines sought and imposed on the financial services industry by regulatory authorities have all increased significantly and may increase further. These regulations often serve to limit our activities, including through the application of increased capital, leverage and liquidity requirements, customer protection and market conduct regulations and direct or indirect restrictions on the businesses in which we may operate or invest. Such limitations can have a negative effect on our business and our ability to implement strategic initiatives. To the extent we are required to divest certain businesses, we could incur losses, as we may be forced to sell such businesses at a discount, which in certain instances could be substantial, as a result of both the constrained timing of such sales and the possibility that other financial institutions are liquidating similar investments at the same time.
Since 2008, regulators and governments have focused on the reform of the financial services industry, including enhanced capital, leverage and liquidity requirements, changes in compensation practices (including tax levies) and measures to address systemic risk, including potentially ring-fencing certain activities and operations within specific legal entities. We are already subject to extensive regulation in many areas of our business and expect to face increased regulation and regulatory scrutiny and enforcement. These various regulations and requirements could require us to reduce assets held in certain subsidiaries, inject capital into or otherwise change our operations or the structure of our subsidiaries and Group. We expect such increased regulation to continue to increase our costs, including, but not limited to, costs related to compliance, systems and operations, as well as affect our ability to conduct certain businesses, which could adversely affect our profitability and competitive position. Variations in the details and implementation of such regulations may further negatively affect us, as certain requirements currently are not expected to apply equally to all of our competitors or to be implemented uniformly across jurisdictions.
For example, the additional requirements related to minimum regulatory capital, leverage ratios and liquidity measures imposed by q Basel III, together with more stringent requirements imposed by the Swiss q “Too Big To Fail” legislation and its implementing ordinances and related actions by our regulators, have contributed to our decision to reduce q risk-weighted assets and the size of our balance sheet, and could potentially impact our access to capital markets and increase our funding costs. In addition, the ongoing implementation in the US of the provisions of the Dodd-Frank Act, including the “Volcker Rule”, q derivatives regulation, and other regulatory developments described in “Regulation and supervision”, have imposed, and will continue to impose, new regulatory burdens on certain of our operations. These requirements have contributed to our decision to exit certain businesses (including a number of our private equity businesses) and may lead us to exit other businesses. New CFTC and SEC rules could materially increase the operating costs, including compliance, information technology and related costs, associated with our derivatives businesses with US persons, while at the same time making it more difficult for us to transact derivatives business outside the US. Further, in 2014, the Fed adopted a final rule under the Dodd-Frank Act that created a new framework for regulation of the US operations of foreign banking organizations such as ours. Although the final impact of the new rule cannot be fully predicted at this time, it is expected to result in our incurring additional costs and to affect the way we conduct our business in the US, including through our US intermediate holding company. Certain of these proposals are not final, and the ultimate impact of any final requirements cannot be predicted at this time. Further, already enacted and possible future cross-border tax regulation with extraterritorial effect, such as the US Foreign Account Tax Compliance Act, and other bilateral or multilateral tax treaties and agreements on the automatic exchange of information in tax matters, impose detailed reporting obligations and increased compliance and systems-related costs on our businesses. Additionally, implementation of EMIR and its Swiss counterpart, FMIA, CRD IV and the MiFID II reforms may negatively affect our business activities. If Switzerland does not pass legislation that is deemed equivalent to MiFID II in a timely manner or if Swiss regulation already passed is not deemed equivalent to EMIR, Swiss banks, including us, may be limited from participating in businesses regulated by such laws. Finally, we expect that new TLAC requirements, which have been implemented in Switzerland and are being or have been finalized in many other jurisdictions, as well as expected new requirements and rules with respect to the internal total loss-absorbing capacity of G-SIBs (iTLAC), may increase our cost of funding and restrict our ability to deploy capital and liquidity on a global basis as needed. Further, following the formal notification by the UK of its decision to leave the EU, negotiations will commence on the Withdrawal Agreement. This may include the renegotiation, either during a transitional period or more permanently, of a number of regulatory and other arrangements between the EU and the UK that directly impact our business. Adverse changes to any of these arrangements, and even uncertainty over potential changes during any period of negotiation, could potentially impact our results.
We expect the financial services industry and its members, including us, to continue to be affected by the significant uncertainty over the scope and content of regulatory reform in 2017 and beyond. The uncertainty about the US regulatory agenda of the new presidential administration, which includes a variety of proposals to change existing regulations or the approach to regulation of the financial industry, potential changes in regulation following a UK withdrawal from the EU and the results of national elections in Europe may result in significant changes in the regulatory direction and policies applicable to us. Changes in laws, rules or regulations, or in their interpretation or enforcement, or the implementation of new laws, rules or regulations, may adversely affect our results of operations.
Despite our best efforts to comply with applicable regulations, a number of risks remain, particularly in areas where applicable regulations may be unclear or inconsistent among jurisdictions or where regulators revise their previous guidance or courts overturn previous rulings. Authorities in many jurisdictions have the power to bring administrative or judicial proceedings against us, which could result in, among other things, suspension or revocation of our licenses, cease and desist orders, fines, civil penalties, criminal penalties or other disciplinary action which could materially adversely affect our results of operations and seriously harm our reputation.
4 Refer to “Regulation and supervision” for a description of our regulatory regime and a summary of some of the significant regulatory and government reform proposals affecting the financial services industry as well as to “Liquidity and funding management” and “Capital management” in III – Treasury, Risk, Balance sheet and Off-balance sheet for information regarding our current regulatory framework and expected changes to this framework affecting capital and liquidity standards.
Swiss resolution proceedings and resolution planning requirements may affect our shareholders and creditors Pursuant to Swiss banking laws, q FINMA has broad powers and discretion in the case of resolution proceedings with respect to a Swiss bank, such as Credit Suisse AG or Credit Suisse (Schweiz) AG, and, since January 1, 2016, to a Swiss parent company of a financial group, such as Credit Suisse Group AG. These broad powers include the power to open restructuring proceedings with respect to Credit Suisse AG, Credit Suisse (Schweiz) AG or Credit Suisse Group AG and, in connection therewith, cancel the outstanding equity of the entity subject to such proceedings, convert such entity’s debt instruments and other liabilities into equity and/or cancel such debt instruments and other liabilities, in each case, in whole or in part, and stay (for a maximum of two business days) certain rights under contracts to which such entity is a party, as well as the power to order protective measures, including the deferment of payments, and institute liquidation proceedings with respect to Credit Suisse AG, Credit Suisse (Schweiz) AG or Credit Suisse Group AG. The scope of such powers and discretion and the legal mechanisms that would be utilized are subject to development and interpretation.
We are currently subject to resolution planning requirements in Switzerland, the US and the UK and may face similar requirements in other jurisdictions. If a resolution plan is determined by the relevant authority to be inadequate, relevant regulations may allow the authority to place limitations on the scope or size of our business in that jurisdiction, require us to hold higher amounts of capital or liquidity, require us to divest assets or subsidiaries or to change our legal structure or business to remove the relevant impediments to resolution.
4 Refer to “Recent regulatory developments and proposals – Switzerland” and “Regulatory framework – Switzerland – Resolution regime” in Regulation and supervision for a description of the current resolution regime under Swiss banking laws as it applies to Credit Suisse AG, Credit Suisse (Schweiz) AG and Credit Suisse Group AG.
Changes in monetary policy are beyond our control and difficult to predict
We are affected by the monetary policies adopted by the central banks and regulatory authorities of Switzerland, the US and other countries. The actions of the SNB and other central banking authorities directly impact our cost of funds for lending, capital raising and investment activities and may impact the value of financial instruments we hold and the competitive and operating environment for the financial services industry. Many central banks have implemented significant changes to their monetary policy and may implement further changes. We cannot predict whether these changes will have a material adverse effect on us or our operations. In addition, changes in monetary policy may affect the credit quality of our customers. Any changes in monetary policy are beyond our control and difficult to predict.
Legal restrictions on our clients may reduce the demand for our services.
We may be materially affected not only by regulations applicable to us as a financial services company, but also by regulations and changes in enforcement practices applicable to our clients. Our business could be affected by, among other things, existing and proposed tax legislation, antitrust and competition policies, corporate governance initiatives and other governmental regulations and policies, and changes in the interpretation or enforcement of existing laws and rules that affect business and the financial markets. For example, focus on tax compliance and changes in enforcement practices could lead to further asset outflows from our private banking businesses.
Any conversion of our convertible capital instruments will dilute the ownership interests of existing shareholders
Under Swiss regulatory capital rules, we are required to issue a significant amount of contingent capital instruments, certain of which will convert into common equity upon the occurrence of specified triggering events, including our CET1 ratio falling below prescribed thresholds (7%, in the case of high-trigger instruments), or a determination by FINMA that conversion is necessary, or that we require extraordinary public sector capital support, to prevent us from becoming insolvent. As of December 31, 2016, we had 2,089,897,378 common shares outstanding and we had already issued in the aggregate an equivalent of CHF 6.8 billion in principal amount of such contingent convertible capital instruments, and we may issue more such contingent convertible capital instruments in the future. The conversion of some or all of our contingent convertible capital instruments due to the occurrence of any of such triggering events will result in the dilution of the ownership interests of our then existing shareholders, which dilution could be substantial. Additionally, any conversion, or the anticipation of the possibility of a conversion, could depress the market price of our ordinary shares.
4 Refer to “Contingent convertible capital instruments” in III – Treasury, Risk, Balance sheet and Off-balance sheet – Capital management – Issuances and redemptions for more information on the triggering events related to our contingent convertible capital instruments.
We face intense competition
We face intense competition in all financial services markets and for the products and services we offer. Consolidation through mergers, acquisitions, alliances and cooperation, including as a result of financial distress, has increased competitive pressures. Competition is based on many factors, including the products and services offered, pricing, distribution systems, customer service, brand recognition, perceived financial strength and the willingness to use capital to serve client needs. Consolidation has created a number of firms that, like us, have the ability to offer a wide range of products, from loans and deposit-taking to brokerage, investment banking and asset management services. Some of these firms may be able to offer a broader range of products than we do, or offer such products at more competitive prices. Current market conditions have resulted in significant changes in the competitive landscape in our industry as many institutions have merged, altered the scope of their business, declared bankruptcy, received government assistance or changed their regulatory status, which will affect how they conduct their business. In addition, current market conditions have had a fundamental impact on client demand for products and services. We can give no assurance that our results of operations will not be adversely affected.
Our competitive position could be harmed if our reputation is damaged
In the highly competitive environment arising from globalization and convergence in the financial services industry, a reputation for financial strength and integrity is critical to our performance, including our ability to attract and retain clients and employees. Our reputation could be harmed if our comprehensive procedures and controls fail, or appear to fail, to address conflicts of interest, prevent employee misconduct, produce materially accurate and complete financial and other information or prevent adverse legal or regulatory actions.
4 Refer to “Reputational risk” in III – Treasury, Risk, Balance sheet and Off-balance sheet – Risk management – Risk coverage and management for more information.
We must recruit and retain highly skilled employees
Our performance is largely dependent on the talents and efforts of highly skilled individuals. Competition for qualified employees is intense. We have devoted considerable resources to recruiting, training and compensating employees. Our continued ability to compete effectively in our businesses depends on our ability to attract new employees and to retain and motivate our existing employees. The continued public focus on compensation practices in the financial services industry, and related regulatory changes, may have an adverse impact on our ability to attract and retain highly skilled employees. In particular, limits on the amount and form of executive compensation imposed by regulatory initiatives, including the Swiss Ordinance Against Excessive Compensation with respect to Listed Stock Corporations (Compensation Ordinance) in Switzerland and the implementation of CRD IV in the UK, could potentially have an adverse impact on our ability to retain certain of our most highly skilled employees and hire new qualified employees in certain businesses.
We face competition from new trading technologies
Our businesses face competitive challenges from new trading technologies, including trends towards direct access to automated and electronic markets, and the move to more automated trading platforms. Such technologies and trends may adversely affect our commission and trading revenues, exclude our businesses from certain transaction flows, reduce our participation in the trading markets and the associated access to market information and lead to the creation of new and stronger competitors. We have made, and may continue to be required to make, significant additional expenditures to develop and support new trading systems or otherwise invest in technology to maintain our competitive position.

Explainer: Swiss Law Protects Crime

  Uploaded - Thursday, April 06, 2017

Photographer Panos Laskarakis took this stunning shot of the Matterhorn and Lake Riffelsee near Zermatt - a Swiss resort for the super-wealthy, who sometimes bring their pet dogs there clothed in specially tailored mink coats.

Swiss Furious: Wanted CS Raids Done Differently

Yesterday, Swiss Attorney General Michael Lauber elaborated on Friday's complaint about the raids on Credit Suisse's offices. He insisted that Swiss authorities should be involved as early as possible in such “huge” cases. He repeated his frustration that he did not know in advance about raids on the bank’s offices. While “we have great cooperation with Eurojust member states,” the whole investigation “could have been handled in a different manner,” Michael Lauber told reporters Wednesday in the Swiss capital Bern.

The Swiss were furious. The Attorney General complained on Friday that he was:

“astonished at the way this operation has been organised with the deliberate exclusion of Switzerland. The normal customs and rules of international cooperation and legal assistance procedures have apparently not been observed. The federal public prosecutor expects a written explanation from the relevant leading Dutch authorities, and is considering further steps.”

Below we note below several instances where even bigger cases of organized crime operating in Credit Suisse were sent to Switzerland and to EUROJUST - but the Swiss only obstructed them or did nothing.

By now EU authorities realize that the Swiss protect bank crime, so why would they trust them now? 

Michael Lauber Attorney General of Switzerland: Education and professional career
2012 – now Attorney General of Switzerland
2010 – 2011 President of the Financial Market Authority (FMA) Liechtenstein
2004 - 2009 Director of the Liechtenstein Bankers Association (LBA)
2001 - 2004 Head of the Financial Intelligence Unit (FIU) Liechtenstein
2000 - 2001 Attorney in Zürich, Director of SRO PolyReg, Switzerland

Michael Lauber has an impeccable CV. Europeans joke that Liechtenstein is where Swiss bankers go to hide their money. The tiny country, just 72 miles east of Zurich, is the place where the Swiss send their dirtiest customers. Liechtenstein has gotten rich by laundering the money of drug traffickers, Mafiosi, tax cheats and other criminals. A 1999 report from the German secret service described Liechtenstein as a criminal state in the middle of Europe. The German finance minister denounced the country as “a worm in the European fruit.”

Explainer: How Swiss Law Protects Crime

Swiss law has many extraordinary features both in its statutes and the way these are used or misused in practice. 

One Swedish prosecutor said of our extremely strong case: sending it to Switzerland would be like sending it to the waste paper basket.

A Finnish prosecutor said of our extremely strong case: we tried to send it to Switzerland but they refused to cooperate.

One Norwegian police prosecutor did send our extremely strong case to Switzerland but they answered: No No No to the request for cooperation.

EUROJUST did send our extremely strong case to Switzerland but the Swiss did nothing. The responsible head of EUROJUST was stood down for corruption soon afterwards - for illegitimately closing an embarrassing investigation as a favour. Eurojust is the European Union’s judicial cooperation unit

CESR-Pol did send our extremely strong case to Switzerland. The Swiss had an active investigation into the matter but when they received the CESR-Pol request, they very quickly closed it and blamed the victims for the bank's crimes. (How do you blame victims for the atrocities committed on them? How do you blame women for being raped?)

The responsible member at CESR-Pol who brought the case up was one of the most honest and effective members of law enforcement anywhere in the world.

We eventually obtained the internal correspondence between the relevant Swiss prosecutor and the banking regulator with thousands of pages of related documents. These confirmed the corruption of the process for us.

Schizophrenia: Swiss Law and its Practice

The definition of a criminal organization in the Swiss statutes is reasonably similar to elsewhere, but for some reason, Swiss judges apply this law to exclude over 90% of the criminal organizations as generally understood elsewhere.

Likewise, the definition of fraud under Swiss criminal law is reasonably similar to elsewhere, but Swiss prosecutors apply this law to exclude around 98% of fraud as generally understood elsewhere. It is so bad that one of the better Swiss prosecutors told me there is no protection against fraud in Switzerland. I recommend his warning. Never invest in Switzerland or in its crony companions (BVI, Liechtenstein, Caymans etc - there are many unpleasant surprises there).

Tax fraud law is a farce so that what the rest of the world regards as tax fraud is not recognized in Switzerland so foreign information requests were generally doomed. Now they are the more or less the exclusive domain of governments & the occasional very wealthy client. So much for everyone being equal under the law.

Money laundering law is so absurd, "it would even make the cat laugh!" Swiss prosecutors typically just don't see it when a Swiss bank may be at fault. We had one case where there was no "Form A" mandatory under criminal law for a criminal operation inside one Swiss bank - for years, despite multiple senior management inspections and an audit. Needless to say, the beneficial owners of the allegedly criminal assets were never identified by this Zurich bank (the 2nd largest in Switzerland). All this despite the fact that Swiss law criminalizes money laundering and superficially looks fearsome, promising up to 5 years jail for offences like the ones ignored by our prosecutor. 

So surprise! We have a situation where Swiss propaganda can claim powerful laws against the above crimes, but the banks are effectively untouchable.

They say "the devil is in the detail". The Swiss are experts in using detail for their purposes.

Swiss law enforcement is generally divided between the Federal and Cantonal authorities. Officially and internationally, money laundering goes to the Federal authorities. However, the actual investigations are done by the cantonal police and prosecutors, while enforcement and management is mostly done by the SRO's.

The 26 cantons of Switzerland have populations as small as 16,000 (Appenzell Innerrhoden) who also elect the judges for the Supreme Court of the canton. The quality and honesty of the law enforcement and judiciary varies widely. Imaging your local council which might be run by real estate investors or the like, also choosing the judges for the courts. Criminal organizations choose their cantons wisely and if you are a victim, then you have to cope with the canton they chose. You can appeal to the Cantonal judges (good luck with that!). If you don't like them, you can appeal to the Swiss Federal Supreme Court (usually) if you have the money and patience.

Swiss lawyers are forbidden from taking contingency cases and class actions are forbidden. It could take you 10 to 15 years to get to the Federal Supreme Court if your opposition had an obstructive mindset. Swiss banks have an obstructive mindset pretty much hard-wired into their legal departments and disposition. Assuming that you eventually won (fairly unlikely for most people) it would almost be impossible to get a payout that would both cover your incredible legal expenses and pay for your time at much above slave labour rates with zero for your stress.

It is unlikely that you would win anyway, because Swiss law is like Swiss cheese - full of holes, only visible when the cheese is cut. On top of that, many Swiss lawyers are reportedly like a "boys club trading favours" regardless of the interests of the client. Commonly, something "unusual" will happen for the cases of bank opponents - after all, most Swiss lawyers depend on banks for much of their livelihood.

Do you know anyone who sold their soul to the devil? Check these links: Daily Mail, LifesitenewsBreitbart, YouTube, Katehon.

I had a very strong case where at the vital moment, our Swiss lawyer took a job at a rival law firm. Another case where our lawyer decided to send a vital court decision by post when there was a very short time to appeal. One client had their lawyer & Ernst & Young SA auditors strike an agreement with the opposition to settle: withdraw from the criminal case and they received an irrevocable transfer order as payment. However, after they withdrew from the criminal case, the irrevocable transfer evaporated and Ernst & Young just stood by watching - and did nothing.

But, There is More

Swiss law is unusual in that the alleged offenders can get access to investigation files, i.e. they get warned of what is going on in advance.

There was one client who lodged a good money laundering complaint against Credit Suisse. It was well documented and the bank certainly had done a great deal wrong. It went to the Federal prosecutor.

The cantonal prosecutor was already on the case with limited resources. Soon after that, the cantonal prosecutor was summoned to a meeting with Credit Suisse management. The records of that meeting were never taken - illegitimately.

However, after that the cantonal prosecutor lost his resources & had no staff to continue the investigation. Unsurprisingly, he did a complete about face and never threatened the bank which had refused to supply the documents repeatedly requested. He blamed the victims for being victims of fraud, money laundering, embezzlement etc. and closed the case against the bank. About the bank's alleged money laundering - nothing happened - not even a "pretend investigation".

There is Even More

Money laundering enforcement is mostly done by the SRO's - self regulating organizations. If cantonal enforcement was loopy, the SRO's are the icing on the cake. We had one case where we lodged a complaint with the SRO (called ARIF) regarding what seemed to us to be an extremely shady operation called Gerom AG. Unfortunately, Gerom's owner, a certain Dr Josef Bollag, was also on the management committee of the SRO. Well. Surprise - the SRO did nothing, never heard back from them. But Dr Bollag's lawyer sent us and the similarly situated victims nasty letters threatening to take us to court for attacking their reputation.

I brought this to the attention of the Money Laundering Control Office and had a face to face meeting with their management. Yes - they knew of this situation. But no, they have no responsibility to protect victims. Their responsibility stops exactly at ensuring the "health of the financial system" (from the Swiss perspective only, in my opinion).

We also complained to the Danish FIU and to EUROJUST on behalf of the Danish victim. The Danish FIU illegitimately refused to act saying it was the job of the Swiss. EUROJUST likewise did nothing.

FYI, Michael Lauber was Director of the SRO PolyReg, Switzerland 2000 - 2001.

Also FYI, these are Swiss Valais Blacknose sheep - check this 44 second video of one.


Copyright 2017. Disclaimer: Postings and comments on this blog are made by external contributors. Their accuracy is not guaranteed. FRCS & the blog publisher cannot take responsibility for their content. Communicate any explanations, objections, opinions etc. to FRCS or as comments.

Recent Posts