The UK’s Financial Services Authority may take enforcement action against Credit Suisse and its senior managers after rogue traders at the Swiss bank knowingly overvalued positions – leading to a $2.84 billion (Dh10.5bn) write-down.
Credit Suisse revealed on Thursday that some of its traders were guilty of “intentional misconduct” as they had introduced pricing errors into their positions during the fourth quarter of last year and the first quarter of 2008.
The bank first revealed in February that some of its asset-backed securities had been wrongly priced but said it was unable to establish whether this had been done intentionally.
The bank has now decided that the pricing errors were not errors but “the result of intentional misconduct by a small number of traders”.
A number of dealers, along with the bank’s global head of collateralised debt obligations, Kareem Serageldin, have been dismissed or are going through dismissal proceedings.
Brady Dougan, the bank’s chief executive, described the situation as “disappointing and one that we cannot and will not tolerate”.
Credit Suisse said in a statement: “As we’ve previously reported, Credit Suisse has committed to robust and proportionate remedial actions that will be executed in the coming weeks. We will continue to co-operate fully with regulatory authorities in this matter.”
An analyst who asked not to be identified told Emirates Business: “This episode is indeed embarrassing for an investment bank of Credit Suisse’s stature.
“But this certainly is not the last of the bad news to come from an investment bank.”
Credit Suisse in firing line over rogue traders