Fraud and Wealth Management
Updated: Feb 11, 2021
Credit Suisse (kreh·duht swees) is the second largest wealth management firm in the world in terms of AUM at $1.25 trillion USD. They operate out of Switzerland and manage the assets of some of the wealthiest people on the planet. In 2017 an employee by the name of Patrice Lescaudron was charged with a multitude of charges including forgery, fraud, and criminal mismanagement by prosecutors in Geneva. In 2018 he was found guilty and subjected to five years in prison. In addition, FINMA reprimanded the firm for “failing to adequately supervise him.”
Mr. Lescaudron came to the firm in 2004 with no banking experience and quickly became a top earner for the company. However, he also quickly got involved with shady business practices throughout his 11-year tenure. The main event that did him in was undocumented trades mainly in Raptor Pharmaceutical ($RPTP). In 2014 over 10% of the company was owned by Lescaudron and his clients which automatically banned him from purchasing more shares. After this he is actually nominated for a promotion which he does not receive. He was not deterred by this ban and continued buying shares in 2015. The stock ended up tanking the same year due to lackluster drug testing and his fraud was discovered.
Wall Street Journal reports that between 2010 and 2015, Lescaudron’s emails triggered over 180 alerts for potential data breaches. He avoided his fraud by giving clients self-made spreadsheets instead of actual account statements. While Credit Suisse denies these allegations, it is believed that they knew of his actions as early as 2008 but ignored the issues as Lescaudron made the company a lot of money.
While it may be tempting and even seem easy to engage in fraud to make a quick buck, the consequences are not worth it. Mr. Lescaudron committed suicide in 2019 after a 2-year pretrial and one high profile client is actually suing the firm for over $800 million.