Credit Suisse is learning the hard way that spying on former colleagues is frowned upon, following announcement of an enforcement proceeding against the Zurich-based bank by the Swiss Financial Market Supervisory Authority (FINMA).

The bizarre scandal came to light last year, when it was revealed the bank hired a corporate espionage firm to spy on Iqbal Khan, the former head of the bank’s wealth management division who took a job at rival firm UBS. Credit Suisse claimed at the time it was a one-off incident but then later in the year confirmed, following media reports, that Peter Goerke, a member of the executive board at the time, also was followed for a period of several days by private detectives in February 2019 on behalf of the bank.

An internal investigation concluded Pierre-Olivier Bouée, also a former member of the executive board, issued the order to have Goerke followed. “In no way did this operation—or the subsequent observation of Iqbal Khan—correspond to the corporate culture of Credit Suisse as promoted by the board of directors,” the bank said in a statement at the time.

During questioning following the Khan matter, “the responsible individuals did not respond truthfully when asked about any additional observations and did not disclose the observation of Peter Goerke,” the bank added. “Furthermore, when organizing and carrying out the observation of Peter Goerke, they took care not to leave any identifiable trace in the bank’s systems.”

The board called the conduct “wrong and disproportionate” and that it had “resulted in severe reputational damage to the bank.” The bank said it has since “put safeguards in place to ensure that such incidents are not repeated. These include personnel decisions and the mandate to implement more rigorous internal policies.”

Ultimately, Bouée was terminated. And on Feb. 7, the board announced it had “unanimously accepted” the resignation of Tidjane Thiam as chief executive officer, appointing Thomas Gottstein to assume that role.

“I had no knowledge of the observation of two former colleagues,” Thiam said. “It undoubtedly disturbed Credit Suisse and caused anxiety and hurt. I regret that this happened, and it should never have taken place.”

FINMA proceedings

“The observation activities carried out by Credit Suisse raise various compliance issues,” FINMA said in announcing the investigation last year. As part of its probe into the matter, the regulator engaged the help of an independent auditor.

In an update, issued Wednesday, FINMA said the auditor has completed the investigation. FINMA has now “opened enforcement proceedings against the bank, in which it will pursue indications of violations of supervisory law in the context of the bank’s observation and security activities and, in particular, the question of how these activities were documented and controlled.

FINMA said it “will inform the public about the conclusion of the enforcement proceedings. It will not comment further on the content of the ongoing proceedings or the date when the proceedings may be concluded. Typically, such proceedings can be expected to take several months.”

In a statement in response to FINMA’s announcement, Credit Suisse said it “will continue to fully cooperate with FINMA and is determined to support the effort to ensure a complete and expeditious conclusion of the review of this episode and incorporate lessons learned.”

The company added, “The board of directors and the executive board of Credit Suisse agree and unequivocally affirm that the observation of employees is not part of the culture of Credit Suisse. No further comments can be made at this stage until findings are presented by FINMA.”