Credit Suisse Group AG CS will be paying $135 million to New York’s banking regulator to settle charges pertaining to foreign exchange misconduct. As per the banking regulator, the bank was trading ahead of its client orders and sharing information with other banks to boost its own profits by influencing currency prices and benchmark rates.
Though Credit Suisse did not confess to any of the allegations, the bank said it is extremely content to have reached a settlement. The company said it is going to record the fine as a pre-tax charge in its fiscal fourth quarter. It has also agreed to employ an outside consultant for a year to evaluate its practices.
The regulator saw “unsound conduct” by Credit Suisse in its foreign exchange business from 2008 to 2015. Chat rooms were used by traders at all the banks to exchange private information and synchronize trade to manipulate currencies.
Global authorities were investigating into the forex market as traders at several banks are believed to have conspired jointly and misused information on client orders, which led to price manipulation. Notably, banking giants like Barclays BCS, Citigroup C, UBS Group AG UBS, HSBC Holdings HSBC, Bank of America BAC and JPMorgan JPM were slammed with fines by U.S., British and Swiss regulators for forex market manipulation.
In 2015, Barclays agreed to settle its claims by paying $635 million to New York State Department of Financial Services (“DFS”). Also, BNP Paribas SA has agreed to pay fines earlier this year for similar allegations. However, investigations relating to other banks are still active.
Maria Vullo, the DFS superintendent, said in a statement, “Certain Credit Suisse executives in the bank’s foreign-exchange unit deliberately fostered a corrupt culture that failed to implement effective controls in its foreign exchange trading business.”
As a result of the regulatory probes, shares of Credit Suisse have gained 6.1% in the last 12 months, underperforming industry’s growth of 20%.
Currently, Credit Suisse carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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