Play Zurich police raid Credit Suisse as part of Greensill Capital probe
Searches launched over suspected breaches of Swiss law on unfair competition and misleading advertising
Police raided Credit Suisse Group offices in Zurich and confiscated documents as part of an investigation into whether investors in funds it ran with Greensill Capital were misled, complicating efforts by the Swiss bank to move past the scandal.
Last week’s search comes after a criminal complaint by Switzerland’s State Secretariat for Economic Affairs, or Seco, for violations of a law against unfair competition which deals with issues such as misleading advertising. A spokesman for the public prosecutor confirmed that proceedings had been opened against an “exponent” of Greensill as well as unknown persons.
While neither the bank nor current or former employees are persons of interest in the investigation, the “unknown persons” classification gives prosecutors looking into the matter more leeway to name more people or corporate entities as they progress with their investigation. Documents from Credit Suisse could help prosecutors determine whether the case is valid and who to prosecute.
“As part of an official procedure that is not directed against Credit Suisse, data have been secured,” a spokesperson for the bank said, adding the lender is cooperating with the probe. A spokesperson for the administrators of Greensill Capital declined to comment.
Investors in the $10bn supply chain finance funds are still waiting for over $3bn to be repaid, more than half a year after the money pools were frozen. The Swiss lender has shaken up its top management ranks, replaced asset management head Eric Varvel and removed the business from direct oversight of wealth management since it was forced to suspend the funds. Top executives have left, while CEO Thomas Gottstein has held on to his role.
Earlier this year, Swiss banking regulator Finma also opened enforcement proceedings against the bank to look into the Greensill matter and the collapse of prime brokerage client Archegos Capital Management. Regulators in the US and the UK are also investigating the two matters at the Swiss bank and have requested documents from the bank.
Although Seco’s complaint is rooted in what is called “unfair competition,” it is not related to antitrust matters, according to Patrik Ducrey, the director of the Swiss Competition Commission.
Credit Suisse marketed its supply-chain finance funds as among the safest investments it offered. Loans they held were backed by invoices usually paid in a matter of weeks. But as the strategy grew, they strayed from that pitch and much of the money was lent through Greensill against expected future invoices, for predicted sales.
Another issue that could be examined is whether notes in the funds had valid insurance policies, covering investors against defaults by Greensill’s borrowers.
The Greensill affair and the collapse of Archegos have prompted a soul-searching at Credit Suisse that continues under new chairman Antonio Horta-Osorio.
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