SFC Hits Credit Suisse with $2.8M Fine for Disclosure Lapses

Credit Suisse and its Hong Kong subsidiaries were fined a collective $2.8 million for multiple regulatory breaches spanning ten years by the domestic regulatory authority, the Securities and Futures Commission. The fines were the result of several control failures including those related to its research reports on Hong Kong-listed securities

Some of the violations stretch back more than a decade, with one reprimand over a failure to properly disclose information to clients going back to 2006. However, the SFC noted that the bank had self-reported the problems and had involved senior managers at an early stage, which lightened the penalty.

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.

Credit Suisse failed to disclose its role as a market maker

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 disclose their investment banking relationships in some companies that the bank published analysis reports about their performance between 2006 and 2016.

The lapse in oversight also extended to an update that revised the market maker disclosure in its research, which the regulator said it led to “an inadvertent exclusion of that disclosure from a disclosure template for its research reports.”

For its part, Credit Suisse and its Hong Kong subsidiaries reached a quick resolution, taking immediate remedial actions to reconcile these lapses.

Of note, Credit Suisse had self-reported its own regulatory breaches and its lapses to Hong Kong’s securities watchdog, informing the regulator at an early stage. This was instrumental in averting a higher fine for the bank.

The fact that the bank cooperated in resolving the SFC’s concerns also helped its cause. Averting a larger fine was important for the Swiss group as it looks to 2019.