The Monetary Authority of Singapore (MAS) has imposed a civil penalty of $3.9 million on Credit Suisse AG for its failure to prevent or detect misconduct by its relationship managers (RMs) at its Singapore branch.
RMs had provided clients with inaccurate or incomplete post-trade disclosures, resulting in clients being charged margins that were above the bilaterally agreed rates for 39 over-the-counter (OTC) bond transactions.
When Credit Suisse executes OTC transactions requested by its clients, it charges a difference to the price received from the relevant interbank counterparties. For the 39 transactions, RM had, in breach of sections 201(c) and 201(d) of the Securities and Futures Act 2001 (SFA):
- made false statements to their clients about the interbank rates executed and/or the spreads charged; and/or
- omitted material information that the margins charged were above the agreed rates.
This enforcement action follows MAS’ review of pricing and disclosure practices in the private banking industry. Investigations revealed that the bank had not put in place adequate controls, such as post-transaction monitoring, to prevent or detect misconduct by RMs. Credit Suisse has since strengthened its internal controls to prevent such misconduct from happening again.
The bank has accepted liability under section 236C of the SFA for its failure to prevent or detect the misconduct of its RMs and paid MAS the civil penalty. As part of the civil penalty settlement, Credit Suisse has also separately compensated its affected clients.