Credit Suisse uncovers Fraud

Credit Suisse Group AG has apparently uncovered fraud within its wealth management arm, two years after concerns were raised by the regulator in an analogous case that raised important questions about controls.

The finance giant removed a staff member who forged documentation relating to an African wealth management client, according to inside sources. The fraud came to light this year and led to a loss of about $11 million for the bank.

The latest scandal follows a restructuring of the risk function at Credit Suisse as chief executive officer Thomas Gottstein seeks to bolster oversight..

“Credit Suisse confirms a case from the first quarter of 2020 in which a small number of clients were affected by unauthorized actions of a client adviser,” the bank said in a statement. “Credit Suisse took appropriate legal measures and informed the affected clients and relevant regulators.”

The fraud and losses were booked in the unit led by Raj Sehgal, which serves the non-resident Indian community and sub-Saharan Africa. Clients are in the process of being compensated, according to one of the people.

International wealth management which caters to Credit Suisse’s wealthy clients outside of Switzerland and Asia, reported provisions for credit losses of 74 million francs in the first six months.

The most recent fraud echoes a much bigger case when Patrice Lescaudron, a former star private banker, was sentenced to prison after he forged documents to cover mounting client losses.

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