Swiss bank Credit Suisse has been fined $1.75 million (SFr1.65 million) in the United States for failing to meet rules in the sale of securities.This content was published on December 28, 2011 - 20:44
Credit Suisse violated a US regulation known as SHO, which requires a broker or dealer to have reasonable grounds to believe that a security can be borrowed and is available for delivery before accepting a short sale order, said the Financial Industry Regulatory Authority (FINRA).
In short sales, investors sell securities they do not own, hoping that their price will fall before buying them back and returning them, pocketing the difference.
The regulator said Credit Suisse's supervisory and compliance monitoring system was "seriously flawed", over a period spanning June 2006 through to December 2010.
It added that the bank released millions of short sale orders to the market without documenting whether it would be able to locate and deliver the securities, a requirement under regulation SHO.
The bank also mismarked tens of thousands of sale orders in its trading systems, identifying them as "long" when they were in fact short sales, FINRA said.
"We are pleased that we have reached closure and this matter is now behind us," Credit Suisse said.
FINRA handed out a bigger penalty of $12 million to UBS in October, for similar violations from 2005 to 2010.
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