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UK regulator fines Credit Suisse over 'rogue traders'

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  • UK regulator fines Credit Suisse over 'rogue traders'

UK - Credit Suisse has been hit with a £5.6m (€7m) fine from the UK's Financial Services Authority for failing to keep an eye on activity inside its business which led to the "mis-marking and mis-pricing" of some of its asset-backed securities.

Brady Dougan, chief executive at Credit Suisse Group, announced to the market in February this year it had uncovered evidence of ‘mis-pricing' by rogue traders who had boosted the value of assets to improve the company's financial position. (See earlier IPE story: Credit Suisse suspends traders after debt mismarking)

Certain individuals were eventually suspended from the firm, but it had a material impact on the company as officials were forced to announce a writedown valued at that time at $2.85bn (€1.93bn) after it was found certain high-risk structured products had been overpriced in the Structured Credit Group.

The FSA fined Credit Suisse for breaching Principles 2 and 3 of its regulations, as the company had failed to supervise the business of the SCG as failures in the system meant it took the organisation five months to spot the problem and then "did not act in a timely way on the concerns they had identified about the pricing of certain asset-backed positions".

The fine could have been significantly higher as the FSA has a policy of reducing fines by up to a third under the ‘settlement discount scheme' if companies are seen to be doing all they can to cooperate with its investigations and remedy any concerns about regulated activity.

On the back of this fine, Dougan today said: "This incident was unacceptable to me and the Executive Board. It does not represent the high ethical standards of Credit Suisse. Our overall control framework remains sound and we have taken actions to implement a remediation program to address the findings of our internal review. We are pleased to settle with the UK FSA, so we can now move forward."

If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email julie.henderson@ipe.com

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