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Lara Warner propelled Credit Suisse's compliance department into an industry-leading showcase. The path there was bumpy, as the sudden rupture between the Swiss bank and joint venture partner Palantir illustrates.

In February 2017, Signac's world was in order: the joint venture between Silicon Valley's Palantir and Switzerland's Credit Suisse was one year in. The Swiss bank's initial feedback using the software was favorable, compliance boss Lara Warner told Swiss outlet «Handelszeitung» (behind paywall, in German).

Besides dealing with room risks like rogue traders which Signac helped the bank address, the joint venture was to scrutinize private bankers in the wealth management arm. By the end of 2017, the two companies planned to sell the roughly 40-person strong team's software to third parties.

It never came to that. Though Signac warranted a favorable mention in Credit Suisse's «corporate responsibility report» for 2016, which was published in March of the following year, by June the joint venture was history.

Finish Line at Signac

Signac, which took up residence outside the bank, in New York's hip Meatpacking District, was roiled in the three intervening months. The start-up, including office dog Roger, also stood apart from Wall Street culturally. Its programmers worked on software for surveillance of traders which the bank was soon to roll out.

The fledgling team under the leadership of Credit Suisse's former compliance chief in the U.S., Colleen Graham, and Palantir's technology boss, Sean Hunter, quickly came under pressure: the joint venture, in which both Graham and Hunter were financially vested, wasn't fulfilling its obligations in time. 

Accounting Snafu

Nevertheless, Signac was proud of its performance: the team had built on a standard Palantir product to design a program to ensnare criminally-minded traders. The product was touted as better than a Palantir-developed one which was seeded by the Central Intelligence Agency and used by the Federal Bureau of Investigations, or FBI, among others.

Signac had opted to not book revenue on the product until it was fully shipped and delivered. The reasoning? The product was something entirely new, which couldn't be accounted for in a similar fashion to existing services.

Harsh Responses

This swung the consolidated profit of the venture to a loss, which in turn hit Credit Suisse and Palantir by failing to pitch in revenue as forecast. The unexpected absence came at a dicey time for both Credit Suisse and Palantir: the tech firm was mulling a stock-listing (it is still privately held), while the bank was midway through a grueling, invasive three-year restructuring under CEO Tidjane Thiam.

Credit Suisse, which recorded north of $20 billion in revenue that year, appears to have been able to cushion the blow; its response was nevertheless harsh. Warner mulled sacking Signac's boss and high-ranking Palatir executive Melody Hildebrandt termed the accounting snafu in an internal email as a «clusterf*».

Losing Faith

In the same email, the executive wrote that nobody at Credit Suisse wanted to work with Signac anymore – and that Warner and Palantir boss Alex Karp had lost faith in the start-ups co-heads. This seemed to seal the fate of Signac, just two months after Warner's buoyant comments about the venture – to all appearances, due to the differences in opinion over how to book revenue.

The internal emails went public when Graham, the former Signac boss, and veteran of Credit Suisse, accused the Swiss bank of employing untoward methods. She alleges she was spied on for days and shut out of meetings because she wasn't willing to persuade KPMG, Credit Suisse's auditor at the time, to book the revenue in 2016's accounts.

Secretly Dissolved