The Monetary Authority of Singapore (MAS) has imposed a $3.9 million civil penalty on Credit Suisse AG for failing to prevent or detect fraud by a relationship manager (RM) in its Singapore branch.
RM provided customers with inaccurate or incomplete post-trade disclosures, which resulted in customers being charged spreads above bilaterally agreed rates on 39 over-the-counter (OTC) bond trades. .
When Credit Suisse executes an OTC trade requested by a customer, it charges a spread on the price obtained from the relevant interbank counterparty. In 39 transactions, RM violated Sections 201(c) and 201(d) of the Securities and Futures Act of 2001 (SFA) by:
- made false statements to customers regarding interbank prices performed and/or spreads charged;and/or
- Omitted important information that the spread charged was higher than the agreed rate.
This enforcement action follows a review by MAS of pricing and disclosure practices in the private banking industry. The investigation revealed that the bank did not have adequate controls in place, such as post-transaction monitoring, to prevent or detect RM’s fraudulent activities. Credit Suisse has since strengthened internal controls to prevent such misconduct from happening again.
The bank admitted liability under section 236C of the SFA for failing to prevent or detect fraud by RM and paid a civil penalty to MAS. As part of the civil penalty settlement, Credit Suisse also separately compensated affected customers.