Credit Suisse to Pay $10 Million for Mishandling Retail Trades
The Securities and Exchange Commission and the New York Attorney General on Friday jointly fined Credit Suisse Securities $10 million for misrepresenting how it was directing trade orders from retail broker-dealers.
From 2011 to 2015, Credit Suisse’s now-closed Retail Execution Services misled its customers, which included firms such as Edward Jones, Raymond James Financial and others, by advertising that it was executing orders in private markets that would provide better pricing and liquidity, according to the SEC, which also censured the firm, and the Attorney General’s office.
Instead, Credit Suisse routed a “relatively large” portion of orders that were not subject to public reporting of execution quality in such a way that there was either no improvement in pricing or in some cases worse pricing or unfavorable market impact, the regulators said.
Credit Suisse profited by arranging for its principal trading desk to take advantage of dislocations in pricing that arose after it entered some large customer orders, according to the releases.
“Credit Suisse gamed its publicly-reported statistics and misled customers,” New York Attorney General Barbara Underwood said in a prepared statement. “Wall Street firms cannot offer misleading assurances about the execution quality they provide their customers while engaging in electronic trading strategies that undermine those promises.”
The fine is the latest brought under the New York Attorney General’s high-frequency trading initiative, which has resulted in $130.4 million in penalties from four firms, including Credit Suisse.
Credit Suisse settled the charges without admitting or denying the findings. No individuals were named in the SEC’s order.
“Credit Suisse is pleased to have settled this matter, which relates to a business we exited in early 2015,” spokeswoman Nicole Sharp said in a statement. “There is no material impact to the bank.”
Credit Suisse shuddered its U.S. private bank in late 2015, sending around 250 brokers to Wells Fargo Advisors and other rivals.