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Credit Suisse Fined $6.5M by FINRA for Supervisory Failure

Zacks Equity Research

Credit Suisse Group AG’s CS securities business based in the United States has been fined $6.5 million for supervisory failure. The Financial Industry Regulatory Authority (“FINRA”) along with Cboe Global Markets, the Nasdaq Stock Market LLC, the New York Stock Exchange and their affiliated exchanges has imposed the fine.

FINRA said in a statement that Credit Suisse Securities (USA) LLC failed to set up a proper supervisory system required to monitor trading violations like spoofing and layering for clients to whom the company had offered direct market access to various exchanges between 2010 and 2014.

During the four years, the firm executed more than 300 billion shares on behalf of its direct market access clients. And some of the direct market access clients engaged in trading activity, which generated more than 50,000 alerts at FINRA and the Exchanges for potential manipulative trading.

Thus, due to the lack of a proper supervisory system, orders for billions of shares entered the U.S. markets without being subjected to post-trade supervisory reviews for such potential manipulative activity.

FINRA also stated that between 2011 and 2017, Credit Suisse violated the Market Access Rule's provisions related to the prevention of erroneous orders, the setting of credit limits, and the firm's annual review of the effectiveness of its market access controls and supervisory procedures.

The regulator said in its statement, “Credit Suisse violated numerous provisions of the market access rule, which requires broker-dealers that provide their customers access to an exchange or an alternative trading system to reasonably manage the financial and regulatory risks of providing such access.”

However, Credit Suisse has neither admitted nor denied the charges till now.

Shares of the company have gained 10.8% over the past six months against a 1.2% decline of the industry.






Currently, Credit Suisse carries a Zacks Rank #3 (Hold).

A few better-ranked stocks from the same space are Barclays PLC BCS, KB Financial Group Inc KB and UBS Group AG UBS.

Shares of Barclays have gained 23.8% over the past six months. Its Zacks Consensus Estimate for current-year earnings has moved up 9% over the past 60 days. The stock currently sports a Zacks Rank #1 (Strong Buy).

KB Financial’s shares have gained 8.4% over the past six months. The Zacks Consensus Estimate for its earnings for the current year has been unchanged over the past 30 days. It also flaunts a Zacks Rank of 1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

UBS Group currently carries a Zacks Rank #2 (Buy). Its shares have gained 5.3% over the past six months. The Zacks Consensus Estimate for its current-year earnings has been revised marginally upward over the past 60 days.

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