The Financial Authority of Singapore (MAS) has imposed a civil penalty of $3.9 million on Credit score Suisse AG, for its alleged failure “to forestall or detect misconduct by its relationship managers (RMs) within the Singapore department.”
The RMs had allegedly supplied purchasers “with inaccurate or incomplete post-trade disclosures, leading to purchasers being charged spreads which have been above bilaterally agreed charges for 39 over-the-counter (OTC) bond transactions.”
When Credit score Suisse executes OTC transactions “requested by its purchasers, it fees a selection over the worth obtained from the related interbank counterparties.”
For the 39 transactions, the RMs had, in contravention of sections 201(c) and 201(d) of the Securities and Futures Act 2001 (SFA):
- made false statements to their purchasers concerning the executed interbank costs and/or spreads charged; and/or
- omitted materials data that the spreads charged have been above the agreed charges.
This enforcement motion on Credit score Suisse “follows MAS’ overview of pricing and disclosure practices within the non-public banking trade.”
Investigations revealed that “the financial institution had didn’t put in place ample controls, equivalent to post-trade monitoring, to forestall or detect the RMs’ misconduct.”
Credit score Suisse has since “strengthened its inside controls to forestall the recurrence of such misconduct.”
The financial institution has admitted legal responsibility “underneath part 236C of the SFA for its failure to forestall or detect the misconduct by its RMs, and paid MAS the civil penalty.”
As a part of the civil penalty settlement, Credit score Suisse has additionally “individually compensated its affected purchasers.”
Ms Ho Hern Shin, Deputy Managing Director (Monetary Supervision), MAS, mentioned:
“Monetary establishments ought to implement strong governance frameworks and processes to make sure truthful and clear pricing to their clients. We are going to proceed to interact the banks to enhance their controls on this space and won’t hesitate to take agency enforcement motion towards monetary establishments discovered to have breached our legal guidelines.”
Relationship managers right here refer “to relationship managers, assistant relationship managers, funding consultants or execution desk personnel.”
Credit score Suisse paid MAS the civil penalty “instantly after the imposition of the civil penalty.”
A civil penalty motion is “not a prison motion and doesn’t appeal to prison sanctions.”
The civil penalty regime, designed “to enrich prison sanctions and supply a nuanced strategy to fight market misconduct, turned operational at the start of 2004.”
Below part 232 of the SFA , MAS could enter “into an settlement with any individual for that individual to pay, with or with out admission of legal responsibility, a civil penalty for contravening any provision of Half 12 of the SFA.”
The civil penalty could also be “as much as 3 times the quantity of the revenue gained or loss averted by that individual because of the contravention, topic to a minimal of $50,000 (if the individual just isn’t a company) or $100,000 (if the individual is a company).”
