WASHINGTON (Reuters) - Credit Suisse AG (CSGN.S) (CS.N) will pay a $90 million penalty and admit wrongdoing after an investigation by U.S. regulators found the bank misrepresented how it determined a performance metric in its wealth management business to investors.
The Securities and Exchange Commission said former Credit Suisse executive Rolf Bogli, 52, also agreed to settle and pay $80,000 for his role in the violations.
The SEC said its probe found the bank did not follow the methodology it had publicly disclosed for determining new net assets. The metric, the regulator said, helps investors gauge how successful the bank is in attracting new business.
Neither the bank nor Bogli were accused by the SEC of intentionally committing fraud, and Bogli settled the charges without admitting or denying wrongdoing.
A Credit Suisse spokeswoman said the bank cooperated with the SEC and has since remedied the problems.
“It is important to note that there are no allegations of intentional misconduct or that (new net asset) numbers were incorrectly reported. Credit Suisse clients were not harmed,” she said.
Bogli, who had served as chief operating officer for Credit Suisse’s private banking division, “pressured employees” to classify high net worth clients as new net assets despite objections raised by some employees, the SEC said.
Kenneth Breen, an attorney at Paul Hastings who represents Bogli, said his client looks forward to moving on now that a settlement has been reached.
The SEC’s case comes more than two years after an investigative report by a U.S. Senate panel raised questions about Credit Suisse’s reporting to investors about its net new assets.
Those questions were part of a broader report released in February 2014 by the Senate’s Permanent Subcommittee on Investigations which looked into offshore tax evasion and efforts to collect unpaid taxes.
The report highlighted Credit Suisse’s public statements to investors touting the amount of new assets that flowed into its private bank.
“During 2012, multiple high level management and accounting officials within the bank did not follow their own prescribed policies for determining the size of (net new assets),” the report found.
Instead, the report said Credit Suisse reclassified it in such a way which helped bolster the financial performance of the private banking division.
The SEC’s case against the bank on Wednesday did not mention the Senate report, but the allegations in its complaint occurred during 2012-the same time frame outlined in the congressional investigation.
Reporting by Sarah N. Lynch; Editing by Alan Crosby, Jeffrey Benkoe and Bernard Orr