Credit Suisse’s RMs had provided its clients with inaccurate or incomplete post-trade disclosures, and the clients were charged spreads, which were higher than the bilaterally agreed rates for the 39 over the counter (OTC) bond transactions
MAS fines Credit Suisse for misconduct by RMs. (Credit: Claudio Schwarz on Unsplash)
The Monetary Authority of Singapore (MAS) has fined Credit Suisse $3.9m over its failure to prevent or detect misconduct by its relationship managers (RMs) in the Singapore branch.
The RMs include Credit Suisse’s relationship managers, assistant relationship managers, investment consultants or execution desk personnel.
According to the Singaporean regulator, the bank’s RMs had provided its clients with inaccurate or incomplete post-trade disclosures.
Also, the clients were charged spreads, which were higher than the bilaterally agreed rates for the 39 over the counter (OTC) bond transactions.
MAS’ decision to enforce action on Credit Suisse follows a review of pricing and disclosure practices in the private banking industry.
The investigation revealed that the bank had failed to put in place adequate controls, such as post-trade monitoring, to prevent the RMs’ misconduct.
Credit Suisse has strengthened its internal controls to prevent the recurrence of misconduct.
MAS financial supervision deputy managing director Ho Hern Shin said: “Financial institutions should implement robust governance frameworks and processes to ensure fair and transparent pricing to their customers.
“We will continue to engage the banks to improve their controls in this area and will not hesitate to take firm enforcement action against financial institutions found to have breached our laws.”
Credit Suisse, when executing OTC transactions requested by the clients, charges a spread over the price obtained from the relevant interbank counterparties.
Its RMs made false statements to clients regarding the interbank prices or spreads and did not inform them that the spreads charged were above the agreed rates.
They violated sections 201(c) and 201(d) of the Securities and Futures Act 2001 (SFA).
The Swiss lender admitted the liability under section 236C of the SFA for its failure to prevent or detect misconduct by its RMs and paid MAS the civil penalty immediately.
Also, Credit Suisse has separately compensated its affected clients, as part of the settlement.