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January 21, 2022

Credit Suisse hit with fine in US over compliance lapses

US financial regulator has imposed a fine of $9m on Credit Suisse Securities for various operational failures, such as not revealing conflicts of interest in research reports.

The firm was penalised for non-compliance with rules of Financial Industry Regulatory Authority (FINRA)     and the US Securities and Exchange Commission’s Customer Protection Rule.                          

From 2006 to 2017, Credit Suisse issued over 20,000 research reports with inaccurate disclosures about potential conflicts of interest, alleged FINRA.

Furthermore, the firm issued over 6,000 research reports that did not have required disclosures.

Besides, FINRA accused Credit Suisse of failing to maintain control of excess margin securities it carried for customers.

Credit Suisse also failed to calculate the amount of cash or securities needed to maintain in a special reserve bank account, the watchdog said.

FINRA executive vice president and head of the department of enforcement Jessica Hopper said: “The Customer Protection Rule is intended to protect customers’ securities by prohibiting firms from using those securities for their own purposes and to ensure the prompt return of customer securities in the event of broker-dealer insolvency.

“This case should serve as a reminder to member firms of their obligation to protect customer funds from improper use, and to ensure accurate disclosures of potential conflicts between research subjects and firms in research reports, both of which are critically important for investor protection.”

The regulator asked Credit Suisse to certify that it has taken steps to adhere to the rules.

Notably, Credit Suisse consented to the fine without admitting or refuting the allegations.

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