A Wall Street institution has been ordered to pay more than $7 million after U.S. regulators discovered long-standing oversight deficiencies that allowed potentially illegal trading activities 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 company 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 outages occurred over an extended period from August 2012 through September 2020 and were the result of deficiencies in the firm’s trade surveillance systems.
Regulators say these shortcomings caused hundreds of millions of trading, order and position records to be excluded from automated surveillance tools intended to identify suspicious activity.
As a result, Credit Suisse’s broker-dealer department allegedly failed to detect numerous instances of potentially unlawful trading, including activity that may have involved insider trading or manipulative behavior.
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 companies to ensure 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 had not met 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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