(CTN News) – As part of a settlement with the Securities and Exchange Commission (SEC), three entities affiliated with Swiss bank Credit Suisse have agreed to pay a combined total of over $10 million.
Credit Suisse Securities has been fined $1 million, while two of its asset management affiliates have been separately fined $2 million and $300,000.
Additionally, the asset managers have agreed to pay nearly $6.8 million in disgorgement and prejudgment interest. The SEC made this announcement in a press release on Wednesday.
The settlement stems from allegations that the entities provided prohibited underwriting and advising services to mutual funds. In October 2022, a New Jersey court ruled on a 2013 case that accused Credit Suisse Securities of violating state laws related to its role as an underwriter for residential mortgage-backed securities.
As a result, the court has prohibited Credit Suisse Securities and its affiliates from acting as principal underwriters or investment advisers for mutual funds and employees’ securities.
The SEC discovered that the Credit entities disregarded the order and continued to serve in their roles until they were granted a time-limited exemption from the agency shortly before UBS acquired Credit Suisse in June.
According to the SEC’s order, the Credit Suisse entities failed to comply with the New Jersey order because they believed it did not activate the disqualification provisions of Section 9(a) of the Investment Company Act. Although the asset management affiliates were not directly bound by the consent order, its restrictions still applied to them as “affiliated persons” as defined by the act.
The Credit Suisse entities, now part of UBS, obtained a permanent exemption from Section 9(a) of the act in July.
In response to the settlement, a UBS spokesperson stated, “Following the identification and notification of this matter to the SEC, this settlement marks another important step in our efforts to proactively resolve Credit litigation and legacy matters.”
The Credit Suisse entities neither admitted nor denied the SEC’s findings.