FINRA Orders Credit Suisse to Pay $345,000 for Monitoring Deficiencies

Fazzaco learned that the Financial Industry Regulatory Authority (FINRA) has imposed a $345,000 fine on Credit Suisse Securities (USA) LLC, a broker-dealer regulated by the U.S. Security and Exchange Commission, due to the lapses in monitoring deficiencies.

As a part of the settlement, Credit Suisse agreed to pay the penalty. It also agreed to a censure.

According to the regulator, the broker-dealer failed to establish and maintain a reasonably designed supervisory system to to oversee its employees’ outside brokerage accounts, from at least July 2016 to April 2019.

Employees were required to obtain permission prior to trading in their outside personal brokerage accounts, and to comply with certain holding period requirements, to ensure that personal account trading was conducted for legitimate investment purposes. However, Credit Suisse failed to ensure its staff was compliant because of a lack of supervisory procedures such as an automated system for tracking whether new hires made the required disclosures.

FINRA found that in September 2017, Credit Suisse USA had a backlog of about 8,000 accounts with approximately 52,000 trades that could not be matched to a specific employee.

In addition, the company only set up a proper system in 2019 and discovered 2,700 previously undisclosed accounts, with an additional 400 undisclosed accounts being found during the reconciliation of exceptions, according to the financial watchdog.

Also, the firm’s Global Personal Account Trading (GPAT) system was often unable to match trade data received from the brokerage firm feeds to a specific employee.