(Bloomberg) -- Credit Suisse Group AG was blasted by Switzerland’s financial regulator for its failure to properly oversee a former star wealth manager convicted of fraud.

Finma identified deficiencies in the bank’s anti-money laundering controls as well as shortcomings in its risk management of the manager, identified as Patrice Lescaudron by people with knowledge of the matter. Finma didn’t identify Lescaudron by name in the Monday morning statement.

“Instead of disciplining the client manager promptly and proportionately, the bank rewarded him with high payments and positive employee assessments,” Finma said, adding that oversight was “inadequate” because of his special status. Finma said it has ordered Credit Suisse to improve internal controls and will hire a third-party to monitor their implementation.

Lescaudron was convicted in February and sentenced to five years in prison for perpetrating an eight-year scheme in which he made unauthorized trades and faked purchase orders in a bid to reverse deepening clients’ losses that resulted in damages of 143 million Swiss francs ($147 million). Lescaudron’s, activity which began in 2007, went undetected by Credit Suisse and his clients until a massive wrong way bet on a Californian drugmaker in 2015 exposed his behavior.

Credit Suisse has consistently said that Lescaudron was a lone wolf who hid his activity from his bosses and colleagues. Georgian billionaire Bidzina Ivanishvili, his biggest client and victim, said the bank must have, or at least should have, known of his wrongdoing.

Credit Suisse said Monday that Finma acknowledged “the improvements that have been made to our compliance and control framework over the last few years and of the additional measures already planned by the bank.” The bank pointed out that no fine was imposed in the case.

Lescaudron maintained he never profited from his illicit trades and his deception was motivated by a desire to recover his clients’ money. The judge overseeing the case disagreed and found that the Frenchman gained 30 million francs through his deception.

Unlikely appeal

In June, lawyers for Credit Suisse asked Geneva’s Criminal Appeals Court to acquit Lescaudron of a single count of criminal mismanagement, but not his convictions for fraud and forgery. Lawyer’s for one of Lescaudron’ clients said the bank was trying to overturn the mismanagement charge because unlike fraud and forgery, a conviction carries broad implication for what the bank may have to pay out in civil lawsuits.

Then in July a Geneva appeals court ruled that the prosecutor who led the pretrial investigation into Lescaudron must go back and investigate whether the Frenchman should have been charged for mismanaging two of his clients investments. Bertossa had dismissed the allegation from his indictment of Lescaudron a year ago.

(Adds bank appeal of Lescaudron’s conviction in eighth paragraph.)

--With assistance from Jan-Henrik Förster.

To contact the reporters on this story: Hugo Miller in Geneva at hugomiller@bloomberg.net;Jan-Henrik Förster in Zurich at jforster20@bloomberg.net

To contact the editors responsible for this story: Anthony Aarons at aaarons@bloomberg.net, Ross Larsen, Jan Dahinten

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