Boston, MA 05/21/2014 (wallstreetpr) – The Justice Department’s landmark decision to announce Credit Suisse Group AG (VTX:CSGN) guilty of criminal charge for its involvement in helpng Americans dodge tax is not only a plain legal process but a stronger message for other banks under scruitny.
No Longer Soft
Since the eruption of the 2008 financial crisis, the federal court has drawn public criticism over its soft stance in penalizing financial institutions. But, yesterday’s decision successfully settles the case and alerts other banks of similar actions. After being pleaded guilty, Credit Suisse Group AG (VTX:CSGN) will have to pay as much as $2.6 billion,the largest penalty ever, as per its agreement with the U.S. authorities. The bank was found involved in assisting Americans to evade taxes through providing them secret Swiss accounts, putting an end to the three-year old legal probe by the U.S. The decision can be established as a model to be referenced in other similar cases, like that of BNP Paribas SA (BNP) probe.
Attorney General Eric Holder noted at a press conference yesterday that the case is a strong reflection that no company or institution can be above law and that its global presence, size, market share or profitability cannot protect it from penalty or prosecution. Eight employees of Credit Suisse Group AG (VTX:CSGN) were charged of guilty, but the company CEO Brady Dougan and top executives will continue to retain their positions.
In Synchronization With Regulators
Prosecutors have been cautious in pronouncing punishment since the indictment of Arthur Andersen LLP, which resulted in its collapse and job loss to 85,000 employees. However, this time prosecutors worked in synchronization with banking regulators in order to avoid Arthur Andersen repeat. The banking regulators reassured giant financial firms of minimal impact following Credit Suisse’s plea.
In the meanwhile, Credit Suisse noted that the penalty would cost it $1.79 billion in its second-quarter earnings but does not see any material impact on its business capabilities or licenses. But, its client New York Life Insurance Co. said that it will re-evaluate its relationship with the bank. Credit Suisse Group AG (VTX:CSGN) is saved from revealing names of the account holders, who have evaded taxes but will have to assist the department with follow-on requests.
