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Reports US

US stock market daily report (May 06, 2014, Tuesday)

May 7, 2014, Wednesday, 04:14 GMT | 23:14 EST | 07:44 IST | 10:14 SGT
Contributed by Millennium Traders

The U.S. Justice Department is in talks with Credit Suisse Group AG (CS-NYSE) to resolve an investigation into the bank's role in helping Americans evade U.S. taxes, with a penalty price tag of $1.6 billion. The bank has only $1 billion set aside to pay the anticipated penalty. Prosecutors for Justice have been pushing Credit Suisse to plead guilty in connection with the probe. The impact of a criminal plea from Credit Suisse remains uncertain.

In February, Credit Suisse agreed to pay a $196 million penalty to resolve a related case from the U.S. Securities and Exchange Commission on accusations that the bank of provided services to U.S. clients without registering with the SEC.

In the wake of criticism about the record of Justice pursuing criminal activity, they are taking a harder stance on those charged, regardless of who it is. Justice rarely pursue criminal prosecutions against financial firms, especially global companies that could become destabilized following an federal indictment.

In February, the Senate Permanent Subcommittee on Investigations accused the Justice Department of not aggressively pursuing Swiss banks that helped Americans dodge taxes, including Credit Suisse. U.S. lawmakers as well as influential U.S. District Judge Jed Rakoff of Manhattan have broadly accused Justice of shying away from high-level financial prosecutions.

On Monday, Justice posted a video in which U.S. Attorney General Eric Holder said close cooperation with regulators was paving the way for criminal actions against financial institutions, though he did not name them. Holder said. "I intend to reaffirm the principle that no individual or entity that does harm to our economy is ever above the law. There is no such thing as 'too big to jail'." Also on Monday came a statement from a Swiss government source regarding recent negotiations on a guilty plea from Credit Suisse, "My impression is that it will go quickly and it could be in the coming weeks." Justice has no intention of destabilizing Credit Suisse and will use caution to minimize any unintended ripple effects of a guilty plea.

Eveline Widmer-Schlumpf, Switzerland's finance minister, met with U.S. AG Holder in Washington on Friday, to discuss the investigation of Swiss banks and the delicate nature of Justice negotiations. Spokesman for the minister said she will seek "fair and equal treatment" of Swiss banks involved in the probe.