Credit Suisse fined HK$2.8m for research lapses

Business | 19 Jun 2019 4:57 pm

The Securities and Futures Commission has reprimanded and fined Credit Suisse (Hong Kong) and Credit Suisse AG HK$2.8 million over their failures to comply with the disclosure requirements when they published certain research reports on Hong Kong-listed securities.

The SFC found that CSHK and CSAG failed to disclose their investment banking relationships with subject companies in certain research reports on Hong Kong-listed securities published between 2006 and 11 August 2016.

This was caused by an information technology logic issue in one of Credit Suisse’s IT system feeds and it was rectified on  August 11, 2016.

In addition, an update by Credit Suisse in August 2016 to revise the market maker disclosure in its research reports led to an inadvertent exclusion of that disclosure from a disclosure template for its research reports.

As a result, certain research reports on Hong Kong-listed securities distributed by CSHK or CSAG between August 2016 and May 31, 2017 did not disclose that CSHK was a market maker.

This issue was fully rectified on May 31, 2017.

The SFC said CSHK and CSAG have failed to put in place effective systems and controls to ensure compliance with the disclosure requirements and timely detection of the disclosure failures.

The SFC said that in deciding the penalty, it took into account that: CSHK self-reported the two incidents to the SFC; CSHK and CSAG have cooperated with the SFC; and that Credit Suisse has taken remedial measures to rectify the failures and strengthen its internal controls and systems.

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