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HK SFC Fines Credit Suisse HK$39.3 Million for Regulatory Breaches, to Compensate HK$7.6 Million

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HK SFC Fines Credit Suisse HK$39.3 Million for Regulatory Breaches, to Compensate HK$7.6 Million

Hong Kong’s Securities and Futures Commission (SFC)  have reprimanded and fined Credit Suisse HK$39.3 million (US$5.03 million) for regulatory breaches.  The bank had internal controls failure including failure to segregate client securities, report direct business transactions, comply with short-selling, comply with electronic trading requirements, comply with contract notes rules and lack of controls to ensure products suitability for clients.

”  Credit Suisse in HK$39 Million Fine and HK$7.6 Million to Compensate Clients “

The HK$39.3 million fine was determined after SFC took into account Credit Suisse’s prompt and extensive co-operation and agreement to fully compensate affected clients of around $7.6 million (US$970K) for 10 transactions (mismatch of product recommendations & client risk profile) that were found to be either unsuitable or inconclusive.

Credit Suisse (3 entities) had:

  • failed to segregate client securities from house securities on 843 occasions to settle proprietary transactions
  • failed to meet short-selling requirements resulting in overselling 159 transactions (94 were uncovered short orders)
  • failed to report over 1,200 short positions to SFC, late & failed reporting of 320 transactions to The Stock Exchange of Hong Kong (SEHK)
  • unnecessarily reported 78 cross trades to the SEHK
  • failed to ensure pre-trade control for its electronic algorithm trading systems’ configurations for its execution dealers
  • failed to comply with product risk & client risk profile recommendations
  • failed to disclose certain information to clients for contract notes requirements.

 

Credit Suisse (HK) 

  • 2010 to 2016 – failed to segregate client securities from house securities and used client securities on 672 occasions to settle proprietary transactions
  • 2014 to 2015 – failure to comply with short-selling requirements, resulting in 159 oversold transactions between 2014 and 2015, of which 94 transactions were uncovered short sell orders
  • 2012 to 2014 – failed to comply with short-selling requirements, resulting itself (Credit Suisse) and three affiliate companies failing to report over 1,200 short positions to SFC
  • failed to ensure that a pre-trade control for its electronic algorithm trading systems was properly configured for all of its execution dealers

 

Credit Suisse Securities (HK)

  • 2010 to 2016 – failed to segregate client securities from house securities and used client securities on 171 occasions to settle proprietary transactions
  • 2010 – failed to comply with the direct business transactions reporting requirements for trading, resulting in late reporting of over 120 transactions to The Stock Exchange of Hong Kong (SEHK)
  • 2010 to 2015 – failed to report or duplication of reporting of nearly 200 transactions to the SEHK
  • 2015 – unnecessarily reported 78 cross trades to the SEHK

 

Credit Suisse AG (Group)

  • 2010 to 2016, – failed to ensure compliance with regulatory requirements in sale of investment products and ensuring governance over mismatch of product risks classification and client risk profile
  • 2010 – 2013 – failed to ensure the suitability of six risk mismatch transactions for clients
  • 2003 – 2017 – failed to provide and disclose certain information to clients for contract notes requirements

Source: Securities and Futures Commission

 

About Credit Suisse


Credit Suisse Official Logo ThumbnailCredit Suisse
(NYSE:CS) was founded in 1856 by Alfred Escher, under the name “Schweizerische Kreditanstalt.” The original purpose of the new bank known as SKA was to finance the expansion of the railroad network as well as the further industrialization of Switzerland. Fourteen years later, the bank’s first foreign representative office opened up in New York. In 1905, the bank’s first branch outside Zurich opened in Basel following the acquisition of Oberrheinische Bank. Today, it has a global reach with operations in over 50 countries and 48,200 employees from over 150 different nations. It serves its clients through three regionally focused divisions: Swiss Universal Bank, International Wealth Management and Asia Pacific. These regional businesses are supported by two other divisions specializing in investment banking capabilities: Global Markets and Investment Banking & Capital Markets.

  • Origin : Zurich, Switzerland
  • Assets : CHF 820.81 billion
  • Revenue : CHF 23.38 billion
  • Employees : 48,200

Official Website: www.credit-suisse.com

News & Media: Press Release

Updated on 8th August 2016

 





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