FINRA Fines Credit Suisse $275,000 for Failing to Comply With Terms of Global Research Analyst Settlement
Firm Failed to Make Independent Research Available to Its Customers
Washington, D.C. — The Financial Industry Regulatory Authority (FINRA) announced today that it has imposed a fine of $275,000 against Credit Suisse Securities (USA), LLC, for failing to comply fully with one of the key terms of the 2003 Global Research Analyst Settlement.
That settlement, which was between regulators and 13 leading financial services firms, required those firms to make independent research available to their customers. The requirement was intended to restore investor confidence in a research industry badly tarnished by the firms' misconduct.
"One of the primary purposes of the Global Settlement's requirement to provide independent research is to ensure that individual investors could obtain reliable, objective investment advice," said Susan Merrill, Executive Vice President and Chief of Enforcement. "By failing to comply fully with this undertaking, on multiple occasions and for a prolonged period of time, Credit Suisse undermined this important goal."
Beginning as early as 2004, Credit Suisse failed on a number of occasions to post all of the required, current independent research to its Web site. For instance, the firm posted independent research for companies not covered by Credit Suisse and was delayed in providing independent research in a timely manner after offerings. Following the discovery of these initial problems, the firm failed to implement effective measures to detect and prevent additional failures. As a result, the firm's lack of adequate safeguards, controls and oversight caused Credit Suisse to experience three significant failures to make independent research available to its customers.
First, from April 2007 to September 2007, Credit Suisse failed to make available to its customers 32,500 required independent research reports, while some of the research reports that were posted were not the most currently available at the time. Separately, from December 2004 to October 2007, Credit Suisse failed to post independent research from certain research providers for 224 of its covered companies, although independent research coverage by other providers remained available for all but 45 of these companies. The firm failed to detect this deficiency for nearly three years. Finally, beginning at various points from September 2006 to July 2008, Credit Suisse failed to post required independent research for 35 additional covered companies because the firm neglected to deactivate a filtering system in its research database that excluded certain companies from its research website.
The requirement to provide customers with independent research was part of the Securities and Exchange Commission's final agreement with Credit Suisse and was incorporated into a separate agreement with FINRA.
In settling this matter, Credit Suisse neither admitted nor denied the charges, but consented to the entry of FINRA's findings.
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