Credit Suisse Group AG (CS) has admitted wrongdoing and will pay a penalty of $90 M to the SEC settle civil claims accusing the firm of misrepresenting how much it brought into its wealth management business.
According to the regulator’s probe, Credit Suisse strayed from its methodology for figuring out NNA (net new assets), which it disclosed to the public. This is the metric that investors value to gauge a financial institution’s success in bringing in new business.
Although disclosures said that the bank was assessing assets individually according to each client’s goals and intentions, Credit Suisse would occasionally employ an undisclosed approach that was “results-driven” to determine NNA to satisfy specific targets that senior management had set. SEC Enforcement Division Director Andrew J. Ceresney said that the bank’s failure to reveal that it was employing a results-driven approach prevented investors from having the chance to properly judge Credit Suisse’ success in drawing in new money.
Also settling charges over Credit Suisse violations its former private banking division COO Rolf Bögli. The Commission claims that he placed pressure on employees to categorize certain NNA as ultra-high net worth client assets and high net worth assets even though this decision raised concerns among employees who knew about a specific client’s intentions.
Bögli, who is not admitting or denying to the finding that he was a cause of the bank’s violations, will pay an $80K penalty.
It was just in 2014 that a US Senate panel expressed that there may have been potential issues with the way that Credit Suisse was reporting its NNAs to investors. According to the report, when making public statements to investors while discussing new assets that were coming into its private bank, bank accounting officials and a number of individual in high level management did not abide by prescribed policies for determining NNA size. Instead, said the report, the bank reclassified matters in a way that helped enhance the private banking division’s financial performance.
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The SEC Order (PDF)