Republican Securities and Exchange Commission member slammed terms on Credit Suisse Group AG as part of Swiss bank’s stay of $ 475 million settlement over fundraising scandal in Mozambique.
Credit Suisse has secured a temporary waiver of an automatic ban on investment advice alongside this week’s settlement, under which the bank admitted defrauding investors into a tuna fishing project. The revelations about loans arranged by Credit Suisse led the International Monetary Fund and others to freeze loans in Mozambique, causing an economic crisis in the Southeast African country.
SEC Commissioner Hester Peirce, who voted for the waiver, said she opposed certain conditions associated with the stay, including the requirement that Credit Suisse’s chief executive and compliance officer certify each year the bank’s compliance with the Justice Department and SEC agreements.
“I have publicly expressed my fear that we are putting undue pressure on [chief compliance officers]”Ms. Peirce said Wednesday.” Mandatory certifications of the type found in this order can only increase the CCO’s anxiety about increased personal responsibility. “
Under US securities laws, banks and investment advisers can be automatically excluded from a number of investing and fundraising activities if they admit to having been criminally charged or if they are subject to civil action by regulators.
When and whether such waivers should be granted has been the subject of debate both within and outside the SEC, with progressive Democrats such as Senator Elizabeth Warren (D., Mass.) Arguing that the regulator was too quick to grant them repeat offenders.
In its waiver request, Credit Suisse noted that the bank and its subsidiaries had already benefited from numerous other waivers, dating back to the 1970s. One of the more recent waivers involved a $ 2.6 billion settlement by the Credit Suisse in 2014 regarding criminal tax evasion conspiracy charges centered on a scheme to help wealthy Americans hide assets.
The ban that Credit Suisse faces in many cases, including as a result of Tuesday’s settlement, stems from the Investment Companies Act 1940. The law prohibits any person or entity that has been convicted for a crime, including those connected with the purchase or sale of securities, to act as an investment advisor.
Credit Suisse, in its waiver request, named a number of affiliates it said would be affected by such a ban. The bank, which requested that its waiver be made permanent, said none of the affiliates were involved in the misconduct at the heart of its settlements with the Justice Department and the SEC.
He also argued that the effect of a disqualification on the operations and employees of affiliates, most of whom were located in the United States, would be serious and put them at a competitive disadvantage.
About 135 employees are involved in activities that would be affected by a ban, Credit Suisse said.
While Ms Peirce said on Wednesday that she supported the SEC’s decision to grant Credit Suisse relief from the “draconian consequences” of an investment adviser ban, she said conditions imposed by her other members were unnecessary or potentially harmful.
“Unfortunately, the commission has decided to make this necessary relief conditional on certifications and reports that serve no discernible purpose,” she said.
“The candidates had little choice but to accept the conditions imposed by the commission,” she added. “The alternative would have led the funds they serve to find new service providers, an outcome that would have been very disruptive and costly for these funds and their shareholders.”
Paul Leder, a former SEC director who now works at law firm Miller & Chevalier Chartered, said the terms included in Credit Suisse’s waiver did not appear particularly onerous.
“I think what the commission has done here is attach a few bells and whistles to a waiver so that it doesn’t look like it was automatically granted without any associated cost, as a way to respond. criticism of previous waivers, “he said. .
Write to Dylan Tokar at [email protected]
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