Switzerland's financial regulator, the Swiss Financial Market Supervisory Authority (Finma), is reportedly conducting an investigation into Thomas Gottstein, the former CEO of Credit Suisse. The probe is focused on Gottstein's role in the collapse of a $10 billion group of funds associated with the disgraced financier Lex Greensill.
Earlier this year, Finma initiated enforcement proceedings against four unnamed former Credit Suisse employees after determining that the bank had "seriously breached" its risk-management obligations in the Greensill Capital supply-chain financing scandal. According to SonntagsBlick, a Swiss newspaper, Thomas Gottstein is among the Credit Suisse officials being investigated.
Both Finma and UBS Group AG, which has taken over Credit Suisse, declined to comment on the investigation when approached by Bloomberg. Similarly, Gottstein refrained from commenting on the proceedings.
Following the collapse of Greensill Capital in March 2021, Credit Suisse froze and began winding down a group of funds worth $10 billion that it had marketed as safe investments to its clients. In the aftermath, the bank commissioned a comprehensive external investigation conducted by Deloitte and Swiss law firm Walder Wyss, which focused on the failures related to the Greensill funds.
Although the investigation was completed in late 2021 and shared with the bank's board of directors and Finma, Credit Suisse opted not to make the report public, citing the ongoing recovery process and legal complexities surrounding the matter.
Credit Suisse has taken actions against several individuals deemed responsible by the board. Roughly 10 employees left the bank as a result, but Gottstein was cleared of any wrongdoing, according to sources familiar with the matter.
It is important to note that Finma's powers to penalize banks are limited, as it is unable to impose fines on the institutions it oversees. Sanctions against individuals usually result in temporary bans from engaging in financial services, but lifetime bans are rare.
The Greensill Capital debacle highlighted Credit Suisse's lax approach to risk management and raised concerns about clear conflicts of interest. Finma criticized the bank for making misleading statements regarding the claims selection process and the funds' exposure to certain debtors.
Credit Suisse has managed to return around $6.8 billion to investors from the Greensill funds, but the bank is still in the process of recovering the remaining funds and facing legal challenges related to the matter. Additionally, the bank agreed to pay an additional $200 million to investors of its supply-chain finance funds just last month.
Overall, this investigation further adds to the tumultuous situation surrounding the collapse of the Greensill-linked funds, putting the spotlight on former Credit Suisse CEO Thomas Gottstein and the actions taken by the bank in managing the risk associated with these funds.