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May 21: Credit Suisse Group AG, Switzerland's second-largest bank, said Friday that it has suspended some employees and bonuses in connection with a Japanese regulatory investigation.
The employees, who Credit Suisse didn't name, are "of different nationalities in Tokyo and London." The bonuses for "a number of employees" will remain suspended pending the conclusion of a probe Japan's Financial Supervisory Agency, or FSA, has conducted.
Zurich-based Credit Suisse said an independent probe by an international law firm found that "some employees attempted to obstruct the (FSA) inspection during its early stages."
The bank said it regretted that misconduct and said it took remedial action, including making an apology to Japan's regulators.
The FSA audit began in January. Credit Suisse said it heard rumors in February of misconduct and called in the law firm Wilmer, Cutler & Pickering after the bank conducted an internal review.
The law firm found that several managers andother staffers allegedly tried to interfere with FSA's probe in its initial stages by hiding and destroying documents, Credit Suisse said.
These employees allegedly sought to conceal activities that may have violated the strict regulatory separation of the banking and securities business in Japan, Credit Suisse said the lawyers' report found. The report, however, said "there was no evidence of efforts to conceal derivatives transactions, or transactions involving failed Japanese financial institutions."
Newspaper reports have alleged that Credit Suisse's investment bank, Credit Suisse First Boston Corp., marketed several plans to help Japanese companies hide losses from their balance sheets. Friday's the overseas edition of the Financial Times reported that Credit Suisse First Boston marketed several plans to help Japanese companies conceal losses from their balance sheets.
Citing documents, the newspaper said Credit Suisse First Boston began marketing plans in the early 1990s to allow companies to hidelosses by investing in derivatives trades through CS Financial Products, a Credit Suisse derivatives arm.
Credit Suisse has maintained that its activities were permitted under Japanese law at the time of the transactions. Meanwhile, the law firm's report "concludes that a few individuals in leadership positions failed both the company and its employees," Credit Suisse said. The bank added that the lawyers' probe concluded that Credit Suisse moved quickly in the case and disclosed any wrongdoing to Japanese regulators.
Credit Suisse said it would make internal management and structural changes to "repair the breach of the group's code of conduct." The Credit Suisse scandal is the latest involving Swiss companies abroad rcently. Drug giant Roche Holding AG agreed Thursday to pay a $500 million fine in a vitamin price-fixing case in the U.S.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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