On November 10, 2015, the Board of Governors of the Federal Reserve System (the Federal Reserve) announced its decision to deny Roger Schaerer’s request to withdraw the Federal Reserve’s action barring him from employment in the banking industry. Schaerer, formerly an institution-affiliated party of Credit Suisse AG (Credit Suisse), was one of five former private bankers and senior managers of Credit Suisse that the Federal Reserve subjected to a bar, after those individuals were indicted for conspiring to defraud the United States by assisting U.S. citizens’ evasion of federal income taxes. Schaerer’s indictment also alleged that he provided false and misleading information to the Federal Reserve Bank of New York (the FRBNY).
On May 11, 2015, the Federal Reserve announced the issuance of a Notice of Prohibition (the Notice) against Schaerer and four other former Credit Suisse employees that prohibits them from participating in the affairs of any banking institution until the indictment against them is finally disposed of or the Notice is otherwise terminated by the Federal Reserve. Schaerer subsequently requested that the Notice be withdrawn, based principally on an argument that it was time-barred. Whether the action was time-barred hinged on a two-month period between when Schaerer signed a separation agreement with Credit Suisse and the separation date in that agreement. If the date Schaerer ceased to be an institution-affiliated party (IAP) of Credit Suisse was the date he signed the agreement, the Notice arguably was time-barred. If Schaerer did not cease to be an IAP until the separation date, the Notice was not time-barred. Schaerer argued that his IAP status ceased when he signed the agreement because that is when he “severed ties” with Credit Suisse. The Federal Reserve disagreed, concluding that Schaerer remained an IAP during the two-month period because Credit Suisse retained control over the manner and means of Schaerer’s work during that period. Accordingly, the action was not time-barred.
The Federal Reserve’s actions against Schaerer and the other Credit Suisse employees follow related coordinated actions taken on May 19, 2014, against Credit Suisse by the Federal Reserve, the U.S. Department of Justice and the New York Department of Financial Services. In its action against Credit Suisse, the Federal Reserve stated that it was continuing to investigate whether separate enforcement actions should be taken against individuals involved in the illegal conduct and included a provision requiring Credit Suisse to terminate and not employ in the future individuals who participated in the illegal conduct. The Federal Reserve has since included similar provisions addressing individual accountability in several high-profile enforcement actions involving violations of U.S. sanctions or anti-money-laundering laws.