CREDIT Suisse has paid a S$3.9 million civil penalty to the Monetary Authority of Singapore (MAS) for its failure to prevent, or detect, misconduct by its relationship managers (RMs) at its Singapore branch.

As part of the civil penalty settlement, the Swiss bank has also separately compensated its affected clients.

On Thursday (Dec 28), MAS said the RMs had provided clients with “inaccurate or incomplete post-trade disclosures” which resulted in these clients being charged spreads above bilaterally agreed rates for 39 over-the-counter (OTC) bond transactions.

Credit Suisse charges a spread over the price obtained from the relevant interbank counterparties while executing OTC transactions requested by its clients. 

The Swiss bank’s RMs were said to have made false statements to their clients regarding the 39 executed interbank prices and spreads charged. They also omitted material information that the spreads charged were above the agreed rates.

Both actions by Credit Suisse’s RMs were deemed offences under the Securities and Futures Act.

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Following the central bank’s review of pricing and disclosure practices in the private banking industry, MAS investigations found that Credit Suisse had also failed to put in place adequate controls – such as post-trade monitoring – to prevent or detect such conduct.

The S$3.9 million penalty was paid by Credit Suisse immediately after it was imposed, said MAS, and the Swiss bank has since strengthened its internal controls to prevent the recurrence of such misconduct.

“Financial institutions should implement robust governance frameworks and processes to ensure fair and transparent pricing for their customers,” said Ho Hern Shin, MAS deputy managing director of financial supervision.

“We will continue to engage the banks to improve their controls in this area and will not hesitate to take firm enforcement action against financial institutions found to have breached our laws,” she added.