The SEC announced today that Credit Suisse AG agreed to pay a $90 million penalty and admit wrongdoing to settle charges of misrepresenting how it determined a key performance metric in its wealth management business. In addition, a former executive of Credit Suisse agreed to settle charges that he was a cause of the violations.
Failure to Disclose Methodology
The SEC alleged that its investigation found Credit Suisse strayed from its publicly disclosed methodology as to how it determined net new assets (NNA), the typical metric utilized by investors in financial institutions to measure success in attracting new business. Disclosures stated that Credit Suisse would individually assess assets based on each client’s intentions and objectives. But Credit Suisse instead at certain times utilized an undisclosed results-driven approach to determining NNA so that it could hit certain goals established by senior management.
The SEC charged that Rolf Bögli, who served as chief operating officer of the firm’s private banking division, pressured employees to classify certain high net worth client assets as NNA despite concerns raised by employees with knowledge about a particular client’s intent.
The SEC’s orders state that Credit Suisse violated Section 17(a)(2) and (3) of the Securities Act of 1933 and Section 13(a) and (b)(2)(A) of the Securities Exchange Act of 1934 and Rules 13a-1, 13a-16, and 12b-20. Bögli agreed to pay a monetary penalty, but neither admitted nor denied the SEC’s findings that he caused certain of the violations.
The SEC’s press release can be found here: