The Wall Street Journal reports that U.S. authorities are close to securing a guilty plea and a settlement of nearly $2.5 billion from Credit Swisse (CS) to settle a probe over allegations that wealthy Americans opened thousands of accounts — worth $10 to 12 billion at their peak — with the megabank in Switzerland, in order to dodge their U.S. taxes.
As part of the $2.5 billion potential settlement, which is subject to change, about $100 million is expected to go to the Federal Reserve and approximately $600 million to the New York State Department of Financial Services. The remaining $1.7 billion would go to the Justice Department, according to the report which cites people familiar with the discussions.
The fact that the Department of Financial Services would collect roughly six times as much in fines as the Fed shows the importance and significance of the agency both on Wall Street and among other regulators.
The Zürich, Switzerland-based bank is expected to plead guilty to the allegations, which would mark a turning point for regulators and prosecutors investigating financial services firms. That said, a guilty plea from Credit Swisse could have widespread implications not just for the bank but also for the broader financial system. But according to a statement by Attorney General Eric Holder earlier this month, prosecutors are working with regulators to make sure that the plea won’t have “catastrophic ramifications for the firm” or the broader finance industry, “such as leading to the revocation of a bank’s license to operate in the U.S.”
“In preparing a case, it would be irresponsible not to consider that fact,” the attorney general said.
The settlement is expected to be finalized as early as next week.
Credit Swisse shares closed down 47 cents, or -1.59%, to end at $29.12 per share today.