FSA Fines Credit Suisse $10.5M

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.”


In Depth

'Smart Beta' Funds In Regulators' Sights, Hedgies May Be Next

Mar 26 2015 | 11:11am ET

Funds that mimic strategies used by active managers for a fraction of the cost could...

Lifestyle

Study: Both Marriage and Divorce Lead to Negative Hedge Fund Performance

Mar 25 2015 | 6:51pm ET

Trouble at home leads to trouble in the market for fund managers, according to researchers...

Guest Contributor

The Life Settlement: Yield For The Investor And Cash For The Consumer

Mar 31 2015 | 6:48am ET

Investors are languishing in a yield-starved, low-interest rate environment, looking...

 

Sponsored Content

    Mar 9 2015 | 6:35am ET

    Kelly RodriquesKelly RodriquesAs more investors look to diversify, many are beginning to use retirement funds to invest in alternative assets such as private equity and real estate. Kelly Rodriques, CEO & President of PENSCO Trust Company, explains how companies can connect with those looking to use their retirement accounts in a different way. Read more…

Editor's Note