Credit Suisse faces penalty for misconduct

Credit Suisse faces penalty for its failure to prevent misconduct by its relationship managers in the Singapore branch.

Credit Suisse had to face a penalty of 3.9 million Singapore dollars (US$3.0 million) imposed by the Monetary Authority of Singapore (MAS) for its failure to prevent or detect misconduct by its relationship managers in the Singapore branch. The penalty comes in response to Credit Suisse bankers providing inaccurate or incomplete post-trade disclosures to its customers, leading to clients being charged spreads above agreed rates for 39 over-the-counter bond transactions. The MAS found that Credit Suisse had insufficient controls to prevent or detect this misconduct during its review of pricing and disclosure practices in the private banking industry.

The MAS highlighted that the relationship managers at Credit Suisse made false statements to clients regarding executed interbank prices and spreads charged while omitting material information about spreads being above agreed rates.

In response to the enforcement action, Credit Suisse has admitted liability and has paid the civil penalty, and separately compensated the affected clients. The bank’s Singapore-based spokesperson stated that they are pleased to resolve the matter with the MAS and have taken steps to enhance policies, procedures, and controls to mitigate any repeating of the same incident.

The penalty follows the MAS’s scrutiny of pricing and disclosure practices in the private banking industry, revealing Credit Suisse’s failure to implement adequate controls. According to MAS, the bank did not have sufficient post-trade monitoring to prevent or detect the misconduct by its relationship managers. MAS Deputy Managing Director Ho Hern Shin emphasized the importance for financial institutions to implement robust governance frameworks and processes, ensuring fair and transparent pricing for customers.

While this civil penalty action does not involve criminal sanctions, it underscores MAS’s commitment to enforcing regulations in the financial sector. The civil penalty regime, introduced in 2004, operates alongside criminal sanctions, offering a nuanced approach to combat market misconduct. MAS intends to engage with banks to enhance controls and warns of firm enforcement actions against financial institutions found to have breached regulations.

Credit Suisse’s acknowledgement of liability and immediate payment of the civil penalty indicate a commitment to addressing regulatory concerns. This incident serves as a reminder for financial institutions to bolster internal controls, align with regulatory standards, and maintain market integrity.