Wednesday, August 13, 2008
FSA fines Credit Suisse £5.6m for failings
The Financial Services Authority (FSA) has today fined the UK operations of Credit Suisse (the subsidiaries) £5.6 million for breaching FSA Principles 2 and 3 by failing to conduct their business with due skill, care and diligence and failing to organise and control their business effectively.
Credit Suisse announced its financial results for 2007 on 12 February 2008. On 19 February 2008, Credit Suisse announced that it had identified mismarking and pricing errors and that it was repricing certain asset-backed securities. The re-pricing involved a write down of revenues by $2.65 billion. The breaches related to the pricing of certain asset-backed securities held by the Structured Credit Group. The SCG specialises in complex, high risk structured products.
In breach of Principle 2, the subsidiaries failed adequately to supervise the business of the SCG and did not act in a timely way on the concerns they had identified about the pricing of certain asset-backed positions. In breach of Principle 3, adequate systems and controls were not put in place by the subsidiaries which meant that they failed to recognise, for approximately five months, that certain of the SCG’s asset-backed positions were wrongly valued.
Margaret Cole, director of enforcement, said: “The penalty reflects our tougher stance on enforcement and our policy of imposing higher penalties to achieve credible deterrence. “It is imperative, particularly in more challenging financial conditions, that firms have in place appropriate systems and controls to manage their risks. The subsidiaries co-operated fully with the FSA and agreed to settle at an early stage of the FSA’s investigation. They qualified for a Stage 1 discount under the FSA’s settlement discount scheme. The fine of £5.6m reflects this discount.
DATED: 13.08.08
FEED: IUK
Credit Suisse announced its financial results for 2007 on 12 February 2008. On 19 February 2008, Credit Suisse announced that it had identified mismarking and pricing errors and that it was repricing certain asset-backed securities. The re-pricing involved a write down of revenues by $2.65 billion. The breaches related to the pricing of certain asset-backed securities held by the Structured Credit Group. The SCG specialises in complex, high risk structured products.
In breach of Principle 2, the subsidiaries failed adequately to supervise the business of the SCG and did not act in a timely way on the concerns they had identified about the pricing of certain asset-backed positions. In breach of Principle 3, adequate systems and controls were not put in place by the subsidiaries which meant that they failed to recognise, for approximately five months, that certain of the SCG’s asset-backed positions were wrongly valued.
Margaret Cole, director of enforcement, said: “The penalty reflects our tougher stance on enforcement and our policy of imposing higher penalties to achieve credible deterrence. “It is imperative, particularly in more challenging financial conditions, that firms have in place appropriate systems and controls to manage their risks. The subsidiaries co-operated fully with the FSA and agreed to settle at an early stage of the FSA’s investigation. They qualified for a Stage 1 discount under the FSA’s settlement discount scheme. The fine of £5.6m reflects this discount.
DATED: 13.08.08
FEED: IUK