Credit score Suisse Group AG’s new-look funding financial institution, CS First Boston, was supposed to help salvage the lender. As a substitute, it could have hastened its fall.

The Swiss financial institution, buffeted by years of missteps and scandals, had a selection final 12 months: Elevate even billions extra in new inventory to close down its scandal-prone funding financial institution or pull out the very best components and attempt to earn money. It went for the second possibility, and miscalculated traders’ willingness to provide it yet another shot.