Credit Suisse Securities and two affiliated entities will pay more than $10 million to settle charges from the U.S. Securities and Exchange Commission that it allegedly provided certain prohibited services.
The SEC said Wednesday that the bank acted as an underwriter and investment adviser to mutual funds after being prohibited from doing so by a New Jersey court in October 2022.
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Credit Suisse has agreed to pay $10 million to resolve charges of unlawful activities, according to the United States Securities and Exchange Commission (SEC). The SEC has alleged that Credit Suisse engaged in certain prohibited underwriting and advisory activities, in breach of applicable federal regulations.
According to the SEC investigation, Credit Suisse participated in underwriting and advisory activities without registering in the same capacity. Meanwhile, the company reportedly provided certain investment banking services without meeting the necessary conditions of a written engagement letter. The SEC rules prohibit broker-dealers from providing such services to clients without prior registration and execution of an engagement letter.
Furthermore, the SEC found that Credit Suisse failed to disclose conflicts of interest to its clients while providing investment banking services. The financial services giant reportedly failed to disclose the alignment of interests between the company and the issuer of the securities, leading to inadequate disclosure. This led to investors investing in securities without having sufficient information regarding the issuer’s potential conflicts of interest.
According to the SEC settlement, Credit Suisse has agreed to pay a penalty of $10 million, without admitting or denying the SEC’s allegations. The company also agreed to hire an independent third-party consultant to review its compliance policies and procedures.
This case serves as a reminder to companies of the stringent compliance rules and regulations governing the industry. Any violation could result in hefty fines and penalties, as well as irreparable damage to the company’s reputation. Companies should make sure they comply with applicable regulations and guidelines and are transparent about any potential conflicts of interest.
