Will An Ongoing Investigation Over Possible Tax Evasion Hurt Credit Suisse (CS) Stock?

NEW YORK (TheStreet) -- Credit Suisse Group  (CS) continues to be the subject of an investigation by New York's bank regulator, which has subpoenaed hard drives and documents over potential tax evasion, sources say, the Financial Times reports.

Credit Suisse shares are down -0.30% to $31.55.

The Department of Financial Services, which regulates the New York bank office of the Swiss bank, has specifically requested the employment records of Roger Schaerer, former head of the New York branch, the paper said.

DFS sent the subpoena last week, sources added, casting a wide net as it requests documents, emails, hard drives, calendar entries and travel and expense reports for all bankers passing through the New York office. The subpoena also seeks human resource and compensation plans for the bankers.

Credit Suisse said it was "co-operating fully" with the investigation.

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TheStreet Ratings team rates CREDIT SUISSE GROUP as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:

"We rate CREDIT SUISSE GROUP (CS) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, solid stock price performance and expanding profit margins. However, as a counter to these strengths, we find that we feel that the company's cash flow from its operations has been weak overall."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Capital Markets industry. The net income increased by 9.2% when compared to the same quarter one year prior, going from $318.19 million to $347.55 million.
  • Net operating cash flow has significantly decreased to -$3,698.89 million or 118.25% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • You can view the full analysis from the report here: CS Ratings Report

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