MAS Fines Credit Suisse: $3.9M Penalty for Relationship Manager Misconduct and Strengthened Controls to Avert Future Issues.
MAS Fines Credit Suisse: $3.9M Penalty for Relationship Manager Misconduct and Strengthened Controls to Avert Future Issues.
MAS Fines Credit Suisse $3.9M for RM Misconduct: Regulatory Response to Oversight Lapses in Singapore Branch. At the crux of the matter is the revelation that the RMs in question provided clients with inaccurate or incomplete post-trade disclosures, resulting in clients facing spreads that exceeded bilaterally agreed rates in 39 over-the-counter (OTC) bond transactions. Typically, Credit Suisse applies a spread over the price obtained from relevant interbank counterparties during OTC transactions executed at the behest of clients.
However, investigations disclosed that, in violation of sections 201(c) and 201(d) of the Securities and Futures Act 2001 (SFA), the RMs made false statements to clients regarding executed interbank prices and/or spreads charged. Additionally, they omitted crucial information indicating that the spreads charged were surpassing agreed-upon rates.
The genesis of this enforcement action lies in MAS’ extensive review of pricing and disclosure practices within the private banking sector. The investigation brought to light Credit Suisse’s failure to implement sufficient controls, such as post-trade monitoring, to detect or prevent the misconduct perpetrated by its RMs preemptively. In response, the bank has undertaken corrective measures, fortifying its internal controls to mitigate the risk of recurrence of such misconduct in the future.
Credit Suisse has taken responsibility for its lapse under section 236C of the SFA, acknowledging its failure to prevent or identify the misconduct committed by its RMs. The bank promptly remitted the civil penalty to MAS. As part of the settlement, Credit Suisse independently compensated clients adversely affected by the RMs’ actions. This incident underscores the critical role of robust regulatory oversight and the imperative for financial institutions to maintain vigilant internal controls, ensuring the integrity and trustworthiness of financial services in an ever-evolving landscape.
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