Civil penalty of S$3.9 million imposed on Credit Suisse AG by MAS for misconduct by its relationship managers

Failure to prevent misconduct by its relationship managers (RMs) has cost Credit Suisse AG S$3.9 million, which was imposed on the bank by the Monetary Authority of Singapore (MAS).

The news of the civil penalty was confirmed by an official news release on December 28, 2023. The aforementioned offence took place in the Singapore branch of Credit Suisse.

As per the release, the RMs had provided clients with inaccurate or incomplete post-trade disclosures, ‘resulting in clients being charged spreads which were above bilaterally agreed rates for 39 over-the-counter (OTC) bond transactions’.

Speaking about the penalty, Ho Hern Shin, Deputy Managing Director (Financial Supervision), 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.”

What was the exact offence?

Explaining the nature of the offence, the release stated that when Credit Suisse executes an OTC transaction requested by its clients, the bank charges a spread over the price obtained from the relevant interbank counterparties.

For the 39 transactions, the RMs had, in contravention of sections 201(c) and 201(d) of the Securities and Futures Act 2001 (SFA):

a. made false statements to their clients regarding the executed interbank prices and/or spreads charged; and/or

b. omitted material information that the spreads charged were above the agreed rates

“This enforcement action on Credit Suisse follows MAS’ review of pricing and disclosure practices in the private banking industry. Investigations revealed that the bank 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,” the release read.

Credit Suisse had admitted to the wrongdoing under section 236C of the SFA. The penalty has also been paid. “As part of the civil penalty settlement, Credit Suisse has also separately compensated its affected clients,” it said.