The Securities and Exchange Commission (SEC) has announced that Credit Suisse Securities and two affiliated Credit Suisse entities have agreed to pay more than US$10 million to settle the SEC’s charges that they provided prohibited underwriting and advising services to mutual funds.
In October 2022, the Superior Court of New Jersey entered a consent order, resolving a case that alleged that Credit Suisse Securities had violated the antifraud provisions of the state’s securities laws.
This was in connection with Credit Suisse’s role as underwriter to residential mortgage-backed securities.
In accordance with the Investment Company Act of 1940, Credit Suisse Securities and its affiliates were prohibited from serving as principal underwriters or investment advisers to mutual funds and employees’ securities companies. However, the SEC order found that the entities continued serving in these prohibited roles until June 7 2023 when the Commission granted them time-limited exemptions.
The Credit Suisse Entities agreed to pay in excess of US$6.7 million in disgorgement and prejudgment interest and civil penalties totaling US$3.3 million — the entities have neither admitted or denied the SEC’s findings.
Corey Schuster, asset management unit co-chief, says: “Today’s action holds the Credit Suisse Entities accountable for not complying with eligibility requirements. This action reinforces the need for entities to properly monitor for events that may cause disqualification and proactively seek and obtain waivers from the Commission before becoming disqualified, or refrain from performing prohibited services.”
