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Credit Suisse fined by SEC for misleading investorsle...

Credit Suisse fined by SEC for misleading investorsle...

By: Alistair Gray in New York

Employees at Swiss group’s private bank misrepresented financial metric to meet performance targets

US regulators have slapped a $90m penalty on Credit Suisse after finding employees at its private bank had misrepresented an important financial metric as they sought to meet performance targets.

Staff who were under pressure from managers presented a misleading picture to investors, the Securities and Exchange Commission said on Wednesday.

Rolf Bögli, former chief operating officer of Credit Suisse’s private banking operation, agreed to pay an $80,000 penalty. He neither admitted nor denied the SEC’s findings.

The settlement comes as the wider banking industry is scrutinised over sales goals and targets. Wells Fargo has been subjected to intense criticism and is facing lawsuits and several investigations over its much bigger sham account scandal.

Unlike at Wells, no clients were harmed by the mispractice at Credit Suisse. Still, the bank itself admitted wrongdoing over the episode, which occurred between 2011 and 2012.

The SEC found that employees reclassified assets that were owned by Credit Suisse’s private wealth clients as “managed” by the bank when they were held for safe keeping. Assets under management typically generate higher fees for financial institutions than those held only under custody.

The bank misrepresented so-called net new assets, a benchmark tracked by senior Credit Suisse managers.

Andrew Ceresney, director of the SEC’s enforcement division, said: “Credit Suisse conveyed to the investing community that it followed a structured process for recognising net new assets when, in fact, the process was reverse-engineered to meet targets.”

Employees were under pressure to “classify certain high net worth and ultra-high net worth client assets as NNA despite concerns raised by employees most knowledgeable about a particular client’s intent”, the commission added.

The bank said in a statement: “We co-operated with the SEC’s inquiry and have undertaken appropriate internal remedial efforts.

“It is important to note that there are no allegations of intentional misconduct or that NNA numbers were incorrectly reported. Credit Suisse clients were not harmed.”

Credit Suisse is undergoing astrategic overhaul under Tidjane Thiam, appointed chief executive last year. The bank is trying to refocus on wealth management in Asia and move away from riskier trading activities.

*This article has been amended to clarify details of the SEC’s complaint.

Copyright The Financial Times Limited 2016. All rights reserved. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web.

https://www.ft.com/content/a47bb2c0-8b2b-11e6-8aa5-f79f5696c731


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