Credit Suisse is reportedly facing fines in Japan after the nation’s securities watchdog, the Securities and Exchange Surveillance Commission (SESC), found that it had allegedly leaked private information about a company.
The SESC, which carries out inspections on behalf of the Financial Services Agency (FSA) and has the power to make recommendations for actions by the agency, has recommended that the FSA penalises Credit Suisse’s Japanese brokerage unit for violations of the country's financial instruments and exchange laws. The type of action that the SESC is seeking has not yet been specified.
The SESC’s recommendation follows information received relating to an analyst at the Swiss bank who is reported to have given non-public information to a colleague in the sales division and at least one customer about an unidentified company’s earnings forecast. The sales employee was said to have solicited at least 33 customers to buy shares in the company whose information was leaked, according to the commission.
Referring to the apparent internal management failures, the SESC commented that Credit Suisse Securities (Japan) Ltd. did not have adequate systems in place for managing non-public information about companies, pointing out that the root cause of its flaws was insufficient measures to ensure internal controls following a downsizing.
According to sources, Credit Suisse has taken the action seriously and will continue to make efforts to strengthen its internal controls. It has posted a statement on its website.
It is not the first time that a securities firm has faced penalties for information leaks in Japan. Last December, Deutsche Bank AG’s local brokerage unit came under fire by SESC after one of its analysts sent salesmen and a client e-mails containing non-public information on a company’s earnings. The German bank was ordered to take measures to prevent a recurrence and improve its Compliance .
