Credit Suisse fined £5.6m

13-08-2008

Credit Suisse fined £5.6m
Credit Suisse has been fined £5.6 million for failing to control the activities of rogue traders earlier this year.

The Financial Services Authority (FSA) fined the bank for "failing to organise and control their business effectively" after Credit Suisse revealed a number of traders in its UK subsidiary had been over-valuing certain asset-backed securities.

Credit Suisse had to re-price the assets, leading to a $2.65 billion writedown in February, a week after announcing its 2007 results.

The news angered investors, as the bank had assured shareholders it had revealed the full extent of its sub-prime losses in the document.

On discovering the irregularities, the bank suspended the traders, later sacking them, and launched an investigation.

The bank acknowledged that it had failed to adequately supervise the traders, which led to the wrong valuations standing for five months before they were found.

Margaret Cole, director of enforcement, said: "It is imperative, particularly in more challenging financial conditions, that firms have in place appropriate systems and controls to manage their risks.

"The sudden and unexpected announcement of the write down had the potential to undermine market confidence."

Credit Suisse co-operated fully with the regulators and agreed to the penalty at an early stage, the FSA said.

Brady Dougan, chief executive of Credit Suisse, said: "Our overall control framework remains sound and we have taken actions to implement a remediation program to address the findings of our internal review."

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