The U.S. Securities and Exchange Commission announced Wednesday that Credit Suisse AG has agreed to pay a US$90million penalty and admit wrongdoing to settle charges that it misrepresented how it determined a key performance metric of its wealth management business.
An investigation found that, “Credit Suisse veered from its publicly disclosed methodology for determining net new assets (NNA), a metric valued by investors in financial institutions to measure success in attracting new business,” the SEC says in a news release.
Rather than assessing those assets based on each client’s intentions, the firm sometimes instead took “an undisclosed results-driven approach to determining NNA in order to meet certain targets established by senior management,” the SEC adds.
In particular, the chief operating officer of the firm’s private banking division, Rolf Bögli, “pressured employees to classify certain high net worth and ultra-high net worth client assets as NNA despite concerns raised by employees most knowledgeable about a particular client’s intent,” the SEC says.
Bogli also agreed to settle charges that he was a cause of Credit Suisse’s violations. He neither admitted nor denied the SEC’s findings, but agreed to pay an US$80,000 penalty.
“Credit Suisse conveyed to the investing community that it followed a structured process for recognizing net new assets when, in fact, the process was reverse-engineered to meet targets,” says Andrew Ceresney, director of the SEC’s enforcement division. “Credit Suisse’s failure to disclose this results-driven approach deprived investors of the opportunity to fairly judge the firm’s success in attracting new money.”
The SEC’s orders find that Credit Suisse violated securities rules. In addition to the penalty, the SEC notes that the firm co-operated with its investigation, and took remedial steps.