SFC Fines Credit Suisse $39m for Multiple Regulatory Lapses

Credit Suisse and its Hong Kong subsidiaries were fined a collective $39.3 million for multiple regulatory breaches by the domestic regulatory authority, the Securities and Futures Commission. The fines were the result of several control failures and the latest example of a lapse in client securities segregation.

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In particular, the SFC’s reprimand and subsequent fine involved Credit Suisse AG along with Credit Suisse (Hong Kong) Limited and Credit Suisse Securities (Hong Kong) Limited. The SFC serves as the region’s paramount regulator, and it routinely shores up forms of market abuse, regulatory lapses and other Compliance Compliance In finance, banking, investing, and insurance compliance refers to following the rules or orders set down by the government regulatory authority, either as providing a service or processing a transaction. Compliance concerning finance would also be a state of being following established guidelines or specifications. This designation can also encompass efforts to ensure that organizations are abiding by both industry regulations and government legislation. Understanding ComplianceCompliance is a In finance, banking, investing, and insurance compliance refers to following the rules or orders set down by the government regulatory authority, either as providing a service or processing a transaction. Compliance concerning finance would also be a state of being following established guidelines or specifications. This designation can also encompass efforts to ensure that organizations are abiding by both industry regulations and government legislation. Understanding ComplianceCompliance is a Read this Term issues.

For Credit Suisse and its subsidiaries, the regulatory actions focused on a series of internal control failures in its operations. This included a failure to properly segregate client securities as well not reporting direct business transactions and failure to comply with several short selling requirements.

The lapse in oversight also extended to multiple electronic trading requirements and contract notes rules as well. For its part, Credit Suisse and its Hong Kong subsidiaries reached a quick resolution, taking immediate remedial actions to reconcile these lapses.

“In this instance, Credit Suisse’s prompt and extensive co-operation have significantly expedited the effective resolution of the issues that caused the SFC’s concerns. Otherwise, the sanctions for similar failures would have been substantially higher,” noted the SFC’s Executive Director of Enforcement, Thomas Atkinson.

Of note, Credit Suisse had self-reported its own regulatory breaches and its lapses to the SFC, informing the regulator at an early stage. This was instrumental in averting a higher fine for the bank. Furthermore, Credit Suisse’s subsidiary also agreed to fully compensate affected clients, to the tune of over $7.6 million.

The fact that the bank has no prior disciplinary history with the SFC also helped its cause. Averting a larger fine was important for the group as it looks to 2018. The group has yet to report its Q4 earnings and 2017 full year financials, which could see a loss that is on par with other banks around the industry.

Changes in tax laws in the US as well as global shifts in regulations have compounded several expenses for big banks - it will be interesting to see if these yielded any material effect on Credit Suisse's financials in 2017. The group is set to report its Q4 earnings on February 14, 2018.