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Compliance December 14, 2023
Credit Suisse Fined $10M by SEC for Not Properly Reporting State-Level Infraction
The bank had previously been cited by New Jersey for making misleading statements to investors but did not seek relief to continue advising mortgage-backed securities.
Reported by Paul Mulholland
The Securities and Exchange Commission announced an agreement Wednesday with Credit Suisse Securities USA and two of its affiliates, whereby Credit Suisse will pay $10 million in penalties and disgorgement for unlawfully underwriting and advising investors on mortgage-backed securities.
In December 2013, New Jersey charged Credit Suisse with making misleading statements to investors about securities it was advising. As part of its consent agreement with New Jersey, Credit Suisse was permanently enjoined from violating the Investment Company Act, among other requirements. This agreement was made in October 2022.
Section 9(a) of the Investment Company Act prohibits an entity from serving as an adviser if it is enjoined by any court order from engaging in any conduct relating to securities trading as a consequence of its misconduct, unless it seeks exemptive relief from the SEC.
The SEC order found that Credit Suisse continued to operate as an adviser from October 2022 until obtaining regulatory relief in June 2023, despite being technically forbidden to do so in the intervening eight months.
Credit Suisse agreed to pay about $7 million in disgorgement and $3 million in civil penalties.
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