MAS imposes S$3.9 million penalty on Credit Suisse over misconduct by relationship managers

SINGAPORE: Credit Suisse has been hit with a S$3.9 million (US$2.9 million) civil penalty by the Monetary Authority of Singapore (MAS) after the bank failed to prevent or detect misconduct by its relationship managers in the Singapore branch.

The bank’s relationship managers had provided clients with “inaccurate or incomplete post-trade disclosures”, which resulted in them being charged spreads which were “above bilaterally agreed rates” for 39 over-the-counter (OTC) bond transactions, said MAS in a release on Thursday (Dec 28).

When Credit Suisse executes OTC transactions requested by its clients, it charges a spread over the price obtained from the relevant interbank counterparties, said MAS.

The authority added that the relationship managers made false statements to their clients regarding the executed interbank prices and/or spreads charged, and omitted material information that the spreads charged were above the agreed rates.

The enforcement action on Credit Suisse follows MAS’ review of pricing and disclosure practices in the private banking industry.

“Investigations revealed that the bank had failed to put in place adequate controls, such as post-trade monitoring, to prevent or detect the relationship managers’ misconduct,” MAS said.

MAS said Credit Suisse has admitted liability and paid the civil penalty immediately after the fine was imposed. 

Credit Suisse has also separately compensated its affected clients as part of the civil penalty settlement.

“Credit Suisse has since strengthened its internal controls to prevent the recurrence of such misconduct,” said the authority.

MAS’s deputy managing director (financial supervision) Ho Hern Shin said: “Financial institutions should implement robust governance frameworks and processes to ensure fair and transparent pricing to their customers.”

“We will continue to engage the banks to improve their controls in this area and will not hesitate to take firm enforcement action against financial institutions found to have breached our laws.”

A civil penalty action is not a criminal action and does not attract criminal sanctions. The civil penalty regime, which MAS said was designed to complement criminal sanctions and provide a nuanced approach to combat market misconduct, became operational at the start of 2004.