Credit Suisse fined $10m for fraudulent trading activities. The Swiss bank has agreed to pay to resolve charges by the US Securities and Exchange Commission (SEC) and New York attorney general (NYAG) Barbara Underwood that it mishandled customer orders in its now-shuttered retail execution services (RES) business.
The $10m settlement amount will be divided equally between the SEC and the NYAG.
Both the watchdogs alleged that RES secretly treated orders for which execution quality was not required to be publicly reported less favorably compared to orders that required public reporting of execution quality.
The glitch was revealed after Underwood’s review of the bank’s source code, trading data and server logs. The review found a function called CountsForStats programmed into RES’ computer code that allowed the firm to make such differentiations.
The bank was also accused of promising customers access to dark pool liquidity, though it processed only a “minimal” number of held orders in dark pools.
SEC New York regional office director Marc Berger said: “Market makers that handle retail orders must be transparent with their customers about how orders will be executed and how the market maker will profit from their customers’ trades.
“The settlement holds Credit Suisse accountable for failing to accurately disclose important information about the nature and quality of its execution of trades for retail investors.”
The bank agreed to the settlement without admitting or refuting the allegations.