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FSA - Enforcement
Credit Suisse fined £5.6m for systems and controls failings
The FSA has fined the UK operations of Credit Suisse (the subsidiaries) £5.6 million for failure to conduct their business with due skill, care and diligence, and failure to organise and control their business effectively. The breaches relate to the pricing of certain asset-backed securities held by the Structured Credit Group (SCG) within Credit Suisse’s Investment Banking Division.
Shortly after the announcement of its financial results for 2007, Credit Suisse announced that it had identified mismarking and pricing errors by a small number of traders and that as a result it was repricing certain asset-backed securities. This led to a write down of revenues by $2.65 billion. Credit Suisse commissioned a detailed review of the causes of the write down and identified failures in the subsidiaries' control over the SCG. The FSA found that the subsidiaries had been in breach of Principles 2 and 3 of the FSA's Statements of Principle for Businesses in that they (i) failed adequately to supervise the business of the SCG and did not act in a timely way on concerns they had identified about the pricing of certain asset-backed positions; and (ii) failed to put in place adequate systems and controls, which meant they failed to recognise, for approximately five months, that certain of the SCG’s asset-backed positions were wrongly valued.
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