The Swiss Financial Market Authority (Finma) has found serious violations of supervisory law at Credit Suisse in view of the affair surrounding the shadowing of former top managers.

In its final report on the incidents in 2019, published on Tuesday evening, the authority identified serious organizational deficiencies and an inadequate corporate culture in parts of the operational management of the second largest Swiss institute at the time.

Two people had been reprimanded, and Finma had initiated so-called enforcement proceedings against three others.

The authority is not allowed to impose fines.

Two years ago it became public that the bank had its star manager Iqbal Khan, who now worked for arch rival UBS, and other top executives monitored.

As a result of the scandal, CEO Tidjane Thiam, Chief Operating Officer Pierre-Olivier Bouee and the head of security left the bank.

The reputation of the institute and the entire Swiss financial center suffered from the many negative headlines.

Seven observations

After clarification, Finma initiated enforcement proceedings against the bank a year ago.

With this instrument, which is used to enforce supervisory law, the authority can take a whole range of sanctions, from precautionary measures to professional bans and the withdrawal of a license.

According to the Finma investigation, Credit Suisse planned and mostly carried out seven observations between 2016 and 2019.

Two members of the Executive Committee in Switzerland and other employees and third parties abroad were shadowed.

The manner of the shadows at that time shows significant deficiencies in the corporate governance of the bank, according to the authority.

The observations were kept secret and in some cases veiled.

In one case, an invoice was subsequently changed to hide the costs.

Several members of the group management were in the picture through shadows.

According to Finma, the bank lied

Statements made publicly and to Finma by the bank later turned out to be partially incomplete or even inaccurate.

“As a result, Credit Suisse did not have an appropriate organization in the security area concerned within the meaning of the Swiss Banking Act,” said the authority's announcement.

"In the relevant period, it did not offer any guarantee that business would be flawless."

In the meantime, the bank has regulated the decision-making and monitoring processes more clearly in the area of ​​security.

In addition, Finma has now caused the bank to set up a new internal reporting system with which the management should continuously inform the board of directors about important governance issues.

In addition, possible further observations would have to be approved by the CEO and the Chairman of the Board of Directors.

In a statement, Credit Suisse regretted that it did not initially provide all of the relevant information.

The bank reiterated that it condemned all unjustified observations.

Monitoring is prohibited unless it is necessary for compelling reasons such as a risk to the physical security of employees.

Finma also published the result of a second enforcement procedure against Credit Suisse on Tuesday evening.

The authority came to the conclusion that the bank had seriously violated money laundering reporting obligations in connection with the scandal over loans to Mozambique.

But that doesn't mean the bank is off the hook.

Finma has also tackled the bank because of the collapse of the US hedge fund Archegos Capital and the emergency liquidation of four funds operated jointly with the now insolvent Greensill.

Antonio Horta-Osorio, Chairman of the Board of Directors since spring, wants to change the culture of the group and heighten risk awareness among employees.