New York Hits Credit Suisse with $135M Fine for Forex Violations

By the C|C Whistleblower Lawyer Team

Credit Suisse AG agreed to pay a $135 million fine to settle charges by the New York State Department of Financial Services (DFS) that the bank violated New York banking law through a variety of illegal activities that disadvantaged customers. Specifically, the government found that from at least 2008 to 2015, Credit Suisse “consistently engaged in unlawful, unsafe and unsound conduct by failing to implement effective controls over its foreign exchange business.” See DFS Press Release.

Included among the specific illegal practices the DFS uncovered:

• Credit Suisse foreign exchange traders participated in multi-party electronic chat rooms, sharing confidential customer information, coordinating trading activity, and manipulating currency prices or benchmark rates, all for the purpose of enhancing their own profits to the detriment of customers.
• Credit Suisse traders worked with traders at different banks to allow a single, designated trader to take on multiple orders from the other participants allowing the trader to push the price of a currency pair in a direction benefitting all the traders involved.
• Credit Suisse employed an algorithm designed to facilitate front-running where the bank trades ahead of known client orders.
• Credit Suisse expanded use of the “last look” functionality in its electronic trading platform to improve profit, improperly disadvantaging customers without sufficiently disclosing to them how the bank’s electronic trading was conducted.

In announcing the settlement, DFS Superintendent Maria Vullo did not mince words in condemning the bank’s conduct as “deliberately foster[ing] a corrupt culture . . . which allowed the bank’s foreign exchange traders . . . [to] repeatedly abuse the trust of their customers over the course of many years.” She stressed that her agency “will not tolerate any violations of law that threaten the integrity of our markets and undermine customer confidence.”

Tagged in: Financial Institution Fraud, Foreign Exchange, Market Manipulation and Trading Violations,