Saturday, 26 July 2014
Last updated 11 hours ago
Aug 15 2008 | 7:22am ET
The Financial Services Authority has fined the U.K. operations of Credit Suisse £5.6 million (US$10.5 million) for what it says was the bank’s failure to “conduct their business with due skill, care and diligence and failing to organise and control their business effectively.”
In February, Credit Suisse announced that it had identified mismarking and pricing errors by a small number of traders and that it was repricing certain asset-backed securities. The re-pricing involved a write down of revenues by $2.65 billion.
According to the FSA, the bank’s hiccup related to the pricing of certain asset-backed securities held by the Structured Credit Group within Credit Suisse's investment banking Division. “The subsidiaries failed adequately to supervise the business of the SCG and did not act in a timely way on the concerns they had identified about the pricing of certain asset-backed positions,” said the FSA.
The agency added that adequate systems and controls were not put in place by the subsidiaries, which meant that they failed to recognize, for approximately five months, that certain of the SCG's asset-backed positions were wrongly valued.
“It is imperative, particularly in more challenging financial conditions, that firms have in place appropriate systems and controls to manage their risks,” said Margaret Cole, director of enforcement.”The subsidiaries here failed to take appropriate steps to control the potentially high risk combination in the Structured Credit Group's holdings of exotic products, opaque valuations and high leverage. The sudden and unexpected announcement of the write down had the potential to undermine market confidence.”
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…