FSA fines Credit Suisse for pricing flaws
The Financial Services Authority has fined the UK arm of Credit Suisse 5.6 million pounds over the pricing of asset-backed securities held within its investment banking division.
FSA tells firms to record callsCredit Suisse announced on February 19, just days after posting full-year results, that it had identified mismarking and pricing errors and was repricing some asset-backed securities, resulting in a $2.65 billion writedown.
"The subsidiaries here failed to take appropriate steps to control the potentially high-risk combination in the structured credit group's holdings of exotic products, opaque valuations and high leverage," said Margaret Cole, director of enforcement at the financial watchdog.
"The sudden and unexpected announcement of the writedown had the potential to undermine market confidence."
The fine imposed on Credit Suisse is the fourth-largest ever levied by the FSA, after penalties levied on Shell, Citigroup and Deutsche Bank.
Credit Suisse, then Credit Suisse First Boston, was hit with a 4 million pound fine in 2002 for attempting to mislead the Japanese regulatory and tax authorities. At the time, this was the highest fine ever imposed by a UK financial regulator.
Credit Suisse had no immediate comment.
When the bank disclosed the pricing errors in February, it suspended the traders involved and said it appeared the traders had been slow to adjust the value of their trading portfolios to fast-moving developments in markets.
(Reporting by Clara Ferreira-Marques, editing by Will Waterman)
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