Today's research note is rather pointed and short. The function of these notes is to provide a little depth and context for an event or environment in the world, primarily focused on Financial markets, and there is a particular subsection of shoddy securities regulations that deserves a moment of reflection. Credit Suisse is a Foreign Private Issuer on the New York Stock Exchange - NYSE, which means it follows a special rule set. This alternative ruleset isn't as game-breaking as any number of the core errors built into the system, regulators asleep at the wheel, or even accounting firms counting on consulting fees; this ruleset just turns the water that much more opaque. Key highlights are reduced financial reports, alternative accounting methods on those financial reports, and an ability to significantly delay market impacting information. Chinese companies filing as ADRs received similar benefits and committed enough fraud to force the SEC to drastically increase reporting requirements. Investors still do not know the whole story of two impactful events from the last few years afflicting Credit Suisse, nor the extent to their cooperation with US Federal authorities in investigations to rival banks. This analyst cannot and will not argue whether Credit Suisse's glass is half empty or half full, only that whatever is in the glass isn't clear.
Credit Suisse can report in US GAAP, non-US GAAP, or International Financial Reporting Standards- of which it only needs to report semiannual unaudited financial statements from the first two quarters. Saving Credit Suisse from all this paperwork will surely help keep them in one lean mean-flailing machine, as they are also not required to disclose material nonpublic information in a timely manner. On top of that, insiders may sell and short sell shares as they please under the guidance, prudence, and regulation by the internal compliance officer - except their audit post-Archegos showed there was no real compliance structure. The other major benefits include Governance exemptions, especially in Compensation disclosures. The biggest one of these is the SEC Proxy Rule Exemption which allows Credit Suisse to make all disclosures and reports in proxy statements under the rules of it's Sovereign, the Swiss National Bank- SNB.
Then there is Rule 12g3-2b. This exemption allows for a FPI to not register a class of securities under some minor qualifiers, one being it's primary listing exchange is outside the US. Late 2021, the Bank of New York Melon issued a new bankruptcy-proof share class, information that was vital to have under their current financial strain. Should recent reports on Qatar's plan to gut and split Credit Suisse be accurate, it would be vital to know major changes and qualify capital raises. If investors expect this information to at least be reported quarterly, again, it does not.
Finally, Credit Suisse serves the interests and at the behest of the SNB, and Swiss government. Credit Suisse exists to service Swiss money and Swiss business interests, to connect foreign investors to Swiss bank accounts, and Swiss bank accounts to foreign markets. Failure to perform adequately in any of these functions will drive more investors away, which the public markets only know due to other financial institutions reporting over $90 Billion in withdrawals from Credit Suisse in October, which never recovered. Cutting the Timberrrr jokes, whatever is happening in and to Credit Suisse will be murky at best. Leave the presents under the tree, give me the financials to unwrap Christmas day.
Author's Note:
I don't intend on writing on Credit Suisse for a while, this is in response to a significant number of questions on investing for a bounce. Credit Suisse is at All-Time-Lows, from previous All-Time-Lows. Whenever those brand new lows stop and how low it goes is anyone's guess, but it is a guess. Too many smart people keep getting this environment wrong to count on any smart guesses, I say stick to what you see - and can see. Good luck, Merry Christmas, Happy Hanukkah, and if I don't see you, have an amazing New Year.
Selected References:
www.perkinscoie.com/.../pch-chapter-15.html
www.credit-suisse.co...ces-cs-and-nyse.html
www.law.cornell.edu/...r/text/17/240.12g3-2
Credit Suisse can report in US GAAP, non-US GAAP, or International Financial Reporting Standards- of which it only needs to report semiannual unaudited financial statements from the first two quarters. Saving Credit Suisse from all this paperwork will surely help keep them in one lean mean-flailing machine, as they are also not required to disclose material nonpublic information in a timely manner. On top of that, insiders may sell and short sell shares as they please under the guidance, prudence, and regulation by the internal compliance officer - except their audit post-Archegos showed there was no real compliance structure. The other major benefits include Governance exemptions, especially in Compensation disclosures. The biggest one of these is the SEC Proxy Rule Exemption which allows Credit Suisse to make all disclosures and reports in proxy statements under the rules of it's Sovereign, the Swiss National Bank- SNB.
Then there is Rule 12g3-2b. This exemption allows for a FPI to not register a class of securities under some minor qualifiers, one being it's primary listing exchange is outside the US. Late 2021, the Bank of New York Melon issued a new bankruptcy-proof share class, information that was vital to have under their current financial strain. Should recent reports on Qatar's plan to gut and split Credit Suisse be accurate, it would be vital to know major changes and qualify capital raises. If investors expect this information to at least be reported quarterly, again, it does not.
Finally, Credit Suisse serves the interests and at the behest of the SNB, and Swiss government. Credit Suisse exists to service Swiss money and Swiss business interests, to connect foreign investors to Swiss bank accounts, and Swiss bank accounts to foreign markets. Failure to perform adequately in any of these functions will drive more investors away, which the public markets only know due to other financial institutions reporting over $90 Billion in withdrawals from Credit Suisse in October, which never recovered. Cutting the Timberrrr jokes, whatever is happening in and to Credit Suisse will be murky at best. Leave the presents under the tree, give me the financials to unwrap Christmas day.
Author's Note:
I don't intend on writing on Credit Suisse for a while, this is in response to a significant number of questions on investing for a bounce. Credit Suisse is at All-Time-Lows, from previous All-Time-Lows. Whenever those brand new lows stop and how low it goes is anyone's guess, but it is a guess. Too many smart people keep getting this environment wrong to count on any smart guesses, I say stick to what you see - and can see. Good luck, Merry Christmas, Happy Hanukkah, and if I don't see you, have an amazing New Year.
Selected References:
www.perkinscoie.com/.../pch-chapter-15.html
www.credit-suisse.co...ces-cs-and-nyse.html
www.law.cornell.edu/...r/text/17/240.12g3-2
