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 (RMs) 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 RMs 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 RMs 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 RMs’ 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.
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.