Credit Suisse took its regulator to court over the investigation of a recent spy scandal – and lost.

The Swiss bank suffered an initial defeat in an investigation by its home regulator Finma, Swiss business outlet «Handelszeitung» (behind paywall, in German) reported on Wednesday. Credit Suisse had rejected Finma's choice of outside investigator as biased, took Finma to court over it, and lost.

This means that Quinn Emanuel lawyer Thomas Werlen will continue to investigate a covert spy scheme bankrolled by Credit Suisse on Iqbal Khan, a top private banker who defected to UBS last year. A star in legal circles, Werlen represented football association Fifa at the U.S. justice department and helped in the investigation involving the 1MDB corruption and money-laundering scandal.

New CEO's Fresh Start

The attempt to legally remove Werlen illustrates the high stakes for Credit Suisse. The bank dismissed first its operating chief for cause, then its CEO two months ago, with its chairman due to go in a year in the wake of the scandal. A huge part of new CEO Thomas Gottstein's job has been to put the scandal behind, as finews.com reported.

Specifically, the bank objected to Werlen because the lawyer reportedly represents another client in a separate case involving Credit Suisse. Werlen helped Russian millionaire Vitaly Malkin pursue the Swiss wealth manager for several hundred million U.S. dollars over highly speculative and risky investments, according to «Handelszeitung».

Mobile Phone Data

The case also illustrates the close-knit ties between Switzerland's banking and legal communities. «Handelszeitung» speculates that Credit Suisse Chairman Urs Rohner, a lawyer, knows Werlen from Lenz & Staehlin, where the two men overlapped from 1990 to 1994.

Rohner is known for responding pugnaciously (if not always successfully) to almost all probes the bank has been involved in, from attempts by Swiss retail clients to recoup funds from Lehman Brothers-tied investments following the financial crisis of 2008/09 to a landmark U.S. tax probe in 2014, for which the bank's stubbornness was explicitly rapped by U.S. justice officials.

Werlen is attempting to seize mobile phone data from all Credit Suisse top executives as well as board members, the newspaper reported, citing a source familiar with the investigation. The Finma-ordered probe follows one mandated by Credit Suisse, in which law firm Homburger found no evidence of wide-spread wrong-doing or management knowledge of misdeeds.