SEC Settles Misrepresentation Case With Credit Suisse and Executive

Investing

Published: October 5, 2016 2:41 pm

Last Updated: January 13, 2020 2:45 am

The U. S. Securities and Exchange Commission (SEC) recently announced that Credit Suisse Group A.G. (NYSE: CS) has agreed to pay a $90 million penalty and admit wrongdoing to settle charges that it misrepresented how it determined a key performance metric of its wealth management business. Along with this, a former executive agreed to settle charges that he was a cause of the brokerage firm’s violations.

The agency’s 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.

Disclosures stated that Credit Suisse was individually assessing assets based on each client’s intentions and objectives. However, the firm at times instead took an undisclosed results-driven approach to determining NNA in order to meet certain targets established by senior management.

According to the SEC, Rolf Bögli, who served as COO of the firm’s private banking division, 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.

Andrew J. Ceresney, Director of the SEC’s Enforcement Division, commented:

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. 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.

Bögli neither admitted nor denied the SEC’s findings that he was a cause of certain Credit Suisse violations. He agreed to pay an $80,000 penalty.