Credit Suisse receives £5.6m fine
Posted by admin on 14 August, 2008 under Business news | 
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The Financial Services Authority (FSA) has fined the UK arm of Credit Suisse £5.6m for mis-pricing some asset-backed securities.
The breaches involved Credit Suisse’s Structured Credit Group (SCG) which specialised in complex, high-risk financial products.
The FSA said the bank had failed to recognise for five months that some of SCG’s valuations were wrong.
Credit Suisse said it had commissioned a “detailed review” of the causes.
Risk controls ‘imperative’
Credit Suisse announced on 19 February – a week after it issued its financial results for 2007 – that it had identified pricing errors by a small number of traders and that it was re-pricing certain asset-backed securities.
“The [Credit Suisse] subsidiaries here failed to… control the potentially high risk combination… of exotic products, opaque valuations and high leverage” Margaret Cole, FSA director of enforcement
As a result of the re-pricing, it announced a write-down in the value of its revenues by $2.65bn (£1.4bn).
“This incident was unacceptable to me and the executive board,” said Credit Suisse Group chief executive Brady W Dougan.
“Our overall control framework remains sound and we have taken actions to implement a remediation programme to address the findings of our internal review,” he added.
The £5.6m fine is not the largest the FSA has imposed, but the financial regulator said it reflected its 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,” said the FSA’s director of enforcement Margaret Cole.
“The subsidiaries here failed to take appropriate steps to control the potentially high risk combination in the Structured Credit Group’s holdings of exotic products, opaque valuations and high leverage,” she said.
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