A Wall Street institution has been ordered to pay more than seven million dollars after US regulators found longstanding supervisory failures that may have allowed potentially illegal trading activity to go undetected for years.
The Financial Industry Regulatory Authority says Credit Suisse Securities (USA) LLC has agreed to a $7,125,000 fine after investigators determined the firm failed to establish and maintain a supervisory system reasonably designed to comply with federal securities laws and FINRA rules aimed at preventing insider trading and market manipulation.
According to FINRA, the failures occurred over an extended period from August 2012 through September 2020 and stemmed from deficiencies in the firm’s trade surveillance systems.
Regulators say those shortcomings caused hundreds of millions of trade, order, and position records to be excluded from automated surveillance tools that were intended to identify suspicious activity.
As a result, Credit Suisse’s broker dealer arm allegedly failed to detect numerous instances of potentially violative trading, including activity that may have involved insider trading or manipulative conduct.
FINRA’s findings indicate that the missing data significantly undermined the firm’s ability to monitor trading across multiple asset classes and accounts.
The regulator says effective supervision requires firms to ensure that surveillance systems receive complete and accurate data so that red flags can be identified and escalated in a timely manner. FINRA concluded that Credit Suisse’s systems and procedures did not meet that standard for nearly eight years.
In addition to paying the fine, Credit Suisse agreed to the findings without admitting or denying the allegations.
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