SINGAPORE – The Monetary Authority of Singapore (MAS) has imposed a $3.9 million civil penalty on Credit Suisse for its failure to prevent or detect misconduct by relationship managers in its Singapore branch.
Credit Suisse paid the penalty to the regulator immediately after it was imposed, and as part of the settlement, also separately compensated its affected clients, said MAS in a statement on Dec 28.
The relationship managers had provided clients with inaccurate or incomplete post-trade disclosures, resulting in clients being charged spreads that were above bilaterally agreed rates for 39 over-the-counter bond transactions.
When Credit Suisse executes such transactions requested by its clients, it charges a spread over the price obtained from the relevant interbank counterparties.
For some of the 39 transactions, the relationship managers had made false statements to clients about the executed interbank prices, spreads charged, or both.
They had also, in some cases, omitted material information that the spreads charged were above the agreed rates.
The enforcement action on Credit Suisse follows a review by MAS of pricing and disclosure practices in the private banking industry.
Investigations revealed that Credit Suisse had failed to put in place adequate controls, such as post-trade monitoring, to prevent or detect the relationship managers’ misconduct.
Credit Suisse has since strengthened its internal controls to prevent the recurrence of such misconduct, said MAS.
The bank has also admitted liability under Section 236C of the Securities and Futures Act 2001.
The section states that a corporation which fails to prevent or detect a contravention that is committed by an employee or officer for its benefit, and is attributable to its negligence, commits a contravention and shall be liable to an order for a civil penalty.
A Credit Suisse spokesman told The Straits Times that the bank has resolved the matter with MAS following a series of independent reviews.
“We have since reimbursed affected clients, which are limited to a very small percentage of the bank’s order processing system. We have taken steps to enhance our policies, procedures and controls to mitigate any recurrence,” said the spokesman.
Ms Ho Hern Shin, deputy managing director for financial supervision at MAS, said financial institutions should implement robust governance frameworks and processes to ensure fair and transparent pricing to their customers.
“We will continue to engage the banks to improve their controls in this area and will not hesitate to take firm enforcement action against financial institutions found to have breached our laws,” she added.
MAS said in September that it had imposed the highest amount in civil penalties from January 2022 to June 2023, compared with previous 18-month periods.
It handed out nearly $13 million in civil penalties for market abuse cases – the largest amount recorded so far. These cases comprised false trading, insider trading and disclosure-related breaches.
It also meted out a total of nearly $7.9 million in financial and composition penalties in the 18 months, including $7.1 million for anti-money laundering breaches.
Among the high-profile actions taken by the regulator during the period was a $3.8 million fine announced in June 2023 on DBS Bank, OCBC Bank, Citibank Singapore and insurer Swiss Life Singapore for breaching anti-money laundering and anti-terrorism financing rules, in a matter related to the global Wirecard scandal.
In August 2022, Noble Group was fined $12.6 million for publishing misleading information in its financial statements.
