Global banking giant Credit Suisse has agreed to pay $10 million to settle charges from the U.S. Securities and Exchange Commission (SEC) over allegations that it engaged in prohibited underwriting and advising activities for mutual funds.
The SEC’s complaint, filed on Wednesday, December 13, 2023, alleges that Credit Suisse Securities and two affiliated entities provided underwriting and investment advisory services to certain mutual funds even though they were prohibited from doing so by a 2022 New Jersey court order.
The order stemmed from a lawsuit filed by the New Jersey Bureau of Securities against Credit Suisse for alleged violations of state securities laws. The lawsuit accused Credit Suisse of misleading investors and misusing client funds. Credit Suisse agreed to pay $47 million in restitution and penalties to New Jersey as part of the settlement.
The SEC’s complaint alleges that Credit Suisse continued to provide prohibited services to certain mutual funds despite the New Jersey court order.
The SEC alleges that Credit Suisse:
- Acted as an underwriter for certain mutual funds by soliciting purchases of their shares.
- Provided investment advice to certain mutual funds, including recommendations on which securities to buy and sell.
- Failed to disclose to the SEC and the mutual funds that it was prohibited from providing these services.
The SEC’s complaint also alleges that Credit Suisse’s conduct violated certain anti-fraud provisions of the federal securities laws.
Without admitting or denying the SEC’s allegations, Credit Suisse agreed to pay a $10 million civil penalty and to cease and desist from further violations of the federal securities laws.
“Credit Suisse’s conduct in this matter was reckless and irresponsible,” said Joseph G. Guerin, Director of the SEC’s Division of Enforcement. “The firm knew it was prohibited from providing these services, yet it continued to do so anyway. This type of behavior undermines the integrity of the markets and harms investors.”
The SEC’s action against Credit Suisse is the latest in a series of regulatory enforcement actions against the bank. In recent years, Credit Suisse has been fined billions of dollars for its role in various financial scandals, including the 2008 financial crisis and the Malaysian sovereign wealth fund scandal.
It is unclear what impact the SEC’s action will have on Credit Suisse’s business. The bank is already facing a number of challenges, including declining profits and a loss of confidence from investors. The SEC’s action could further damage Credit Suisse’s reputation and make it more difficult for the bank to attract new business.
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