Discountenanced Credit Suisse stockholder Gregory Stevenson is suing 29 of Credit Suisse’s current and former directors and officers, the bank’s ex-auditor KPMG, and various KPMG henchmen on behalf of investors alleging the firm looked the other way while aforementioned directors and officers plundered the bank for more than a decade. The docket number is No. 1:23-cv-04458 in Southern District of New York (Stevenson v. Thornburgh et al).
Along with KPMG CEO Paul Knopp and KPMG Global Chairman and CEO Bill Thomas, the suit names Global Head of Audit Larry Bradley, Deputy Chair and Chief Operating Officer Laura Newinski, Global Head of Clients and Markets Regina Mayor, and the long-exited former Global Chairman John B. Veihmeyer who hasn’t been mentioned on this website in at least four years.
The suit also names Brian Sweet, the former PCAOB director and KPMG partner who made up one fifth of the five ex-KPMG executives indicted in January 2018 (“The KPMG 5”) for their roles in the infamous scheme to get steal confidential PCAOB information with the intent of using that info to improve KPMG’s inspection results. With him on the shit list is the rest of KPMG’s PCAOB cheating scandal team: Scott Marcello, David Middendorf, Thomas Whittle, David Britt, former PCAOB inspections leader and also former KPMG executive director Cynthia Holder along with former PCAOB inspector and fellow cheating conspirator Jeffrey Wada.
This is Stevenson’s gripe from Bloomberg Law:
KPMG knew that Credit Suisse lacked sufficient internal controls for more than 15 years, while certifying its financial statements as accurate, Stevenson alleges. It did so “because the New York KPMG operation wanted the huge fees from Credit Suisse, upon which KPMG had become dependent, and which were very important to the individual top partners in New York,” he says.
“Credit Suisse insiders, with the help and acquiescence of the KPMG Defendants, plundered Credit Suisse, and personally profited from their misconduct to the tune of many billions of dollars, including secret illegal bonus pools,” said Stevenson’s complaint. He also refers to the PCAOB cheating scandal as Credit Suisse was among the clients the KPMG conspirators found out were up for PCAOB inspection (along with Citigroup, Deutsche Bank, Banc of California, BBVA, Ambac, Phoenix Life, and NewStar Financial, plus some other non-financials). “Upon learning that the Credit Suisse audits were on the list, KPMG destroyed and altered the workpapers in New York to deceive regulators,” he said. He goes on to say that had KPMG audit leaders not conspired to lift PCAOB information they were not entitled to with the goal of improving inspection results “the discovery would have disrupted the ongoing conspiracy and ameliorated the damage to be suffered by the Credit Suisse shareholders,” he says.
KPMG has not audited Credit Suisse since PwC took their place in 2020. PwC’s audit report prior to the bank’s failure in March included an adverse opinion and management identified material weaknesses in internal controls as of December 31, 2022 and December 31, 2021 per the bank’s 2022 annual report.
We’ll keep you posted on any developments.
KPMG, Credit Suisse Leaders Sued for ‘Reckless’ Bank Management [Bloomberg Law]