The Monetary Authority of Singapore (MAS) has imposed fines and penalties amounting to $3.9 million on Credit Suisse AG for its failure to prevent or detect misconduct by its relationship managers (RMs) in the Singapore branch.

The penalty stems from a series of lapses in which the RMs provided clients with inaccurate or incomplete post-trade disclosures. This ultimately resulted in clients being charged spreads that exceeded bilaterally agreed rates for 39 over-the-counter (OTC) bond transactions.

MAS Fines Credit Suisse $3.9M for RM Misconduct

Credit Suisse, in the execution of OTC transactions at the request of its clients, typically charges a spread over the price obtained from relevant interbank counterparties. However, in this case, the RMs, in violation of sections 201(c) and 201(d) of the Securities and Futures Act 2001 (SFA), engaged in the following misconduct:

• Made false statements to clients regarding the executed interbank prices and/or spreads charged.
• Material information about the spreads charged was omitted, which was above the agreed rates.

The enforcement action by MAS follows a comprehensive review of pricing and disclosure practices within the private banking industry. Investigations uncovered Credit Suisse’s failure to implement adequate controls, including post-trade monitoring, to prevent or detect the RMs’ misconduct. In response, the bank has taken measures to strengthen its internal controls. This is to avoid the recurrence of such misconduct in the future.

So, Credit Suisse has acknowledged its liability under section 236C of the SFA for failing to prevent or detect misconduct by its RMs. As part of the civil penalty settlement, the bank has not only paid the $3.9 million fine to MAS. They have also separately compensated the affected clients.

This regulatory action underscores the importance of robust controls and transparency in the industry. MAS sending a clear message regarding the consequences of lapses in compliance and oversight. 

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