Credit Suisse To Pay SEC $10M Over Advisory Services Misstep

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Credit Suisse To Pay SEC $10M

In a dramatic turn of events, the U.S. Securities and Exchange Commission (SEC) on Wednesday dealt a $10 million blow to three Credit Suisse entities. This decisive move comes as a settlement for the banking giant’s prohibited advisory services, a saga that unfurled in the aftermath of a staggering half-billion dollar settlement with New Jersey regulators over its financial crisis-era dealings in residential mortgage-backed securities (RMBS).

Credit Suisse To Pay SEC $10M: Credit Suisse’s Regulatory Tightrope Walk

In a narrative twist, Credit Suisse Securities and its affiliates found themselves cornered by a New Jersey state court’s consent order last year, following the colossal $495 million RMBS settlement. This order barred them from key roles in the financial advisory world – acting as principal underwriter or adviser to mutual funds and other investment companies. Yet, defying the odds, Credit Suisse entities continued to play these ‘prohibited’ roles, fueled by a belief that the consent order didn’t clip their wings in the business landscape.

A Game of Catch-Up: Credit Suisse’s Eleventh-Hour Exemption

The plot thickens in June, when, in a move akin to a climactic scene, the Credit Suisse entities, just days before UBS’s acquisition, secured a much-needed exemption from the SEC – a moment of redemption for the banking titan.

SEC’s Stark Warning: Vigilance and Compliance are Paramount

The SEC, through the voice of Corey Schuster, co-chief of its Enforcement Division’s asset management unit, delivered a stern message. This episode underscores the importance of entities diligently monitoring disqualifying events and proactively seeking waivers, lest they find themselves in prohibited territories.

The Ripple Effect: Credit Suisse’s Affiliated Entities and the Extended Ban

Adding layers to the narrative, the SEC’s action didn’t just touch Credit Suisse Securities. Its web extended to Credit Suisse Asset Management LLC in New York and the British corporation Credit Suisse Asset Management Limited. Despite not being direct subjects of the New Jersey consent order, their affiliation with Credit Suisse Securities brought them under the same regulatory shadow.

The Price of Settlement: Credit Suisse’s $10M Financial Mea Culpa

In a bid to close this chapter, the Credit Suisse entities agreed to a settlement sum totaling $10 million – a mix of $6.7 million in disgorgement and prejudgment interest, topped with a $3.3 million penalty. This move, executed without admitting or denying the allegations, marks their attempt to smooth over this regulatory rough patch.

Credit Suisse To Pay SEC $10M: Credit Suisse’s Remedial Strides and SEC’s Acknowledgment

In a testament to their effort to turn a new leaf, Credit Suisse’s development of new policies and procedures addressing the collateral consequences of civil and regulatory proceedings settlements did not go unnoticed by the SEC.

UBS’s Statement: A Step Towards Resolving Legacy Issues

A UBS spokesperson chimed in, highlighting this settlement as a critical step in proactively resolving lingering Credit Suisse litigation and legacy matters.

The Backstory: Credit Suisse’s $495 Million RMBS Settlement

This entire episode springs from a 2013 lawsuit by New Jersey regulators, accusing Credit Suisse of misleading investors about asset quality in $10 billion worth of RMBS issuances prior to the financial crisis – a lawsuit that culminated in last year’s $495 million settlement.

The Legal Arena: Representation and Proceedings

In this high-stakes legal drama, the SEC stood its ground with Cynthia Storer Baran and Bradley Lewis, while Credit Suisse turned to Justin Browder of Willkie Farr and Gallagher LLP for defense.

The Proceedings: A Glimpse into the Legal Battlefield

Marking the culmination of this legal saga, the case, titled ‘In the Matter of Credit Suisse Securities (USA) LLC, et al,’ under administrative proceeding number 3-21811, plays out before the U.S. Securities and Exchange Commission, leaving a lasting imprint on the regulatory landscape.