Credit Suisse Entities to Pay $10 Million for Providing Prohibited Mutual Fund Services

The Securities and Exchange Commission today announced that Credit Suisse Securities (USA) LLC and two affiliated Credit Suisse entities (collectively, the Credit Suisse Entities) agreed to pay more than $10 million to settle the SEC’s charges that they provided prohibited underwriting and advising services to mutual funds.

In October 2022, the Superior Court of New Jersey entered a consent order that resolved a case alleging that Credit Suisse Securities violated the antifraud provisions of the New Jersey Securities laws in connection with its role as underwriter to residential mortgage-backed securities. According to the SEC’s order, because the New Jersey court ordered that Credit Suisse Securities shall not violate New Jersey securities laws, Credit Suisse Securities and its affiliates were prohibited from serving as principal underwriter or investment adviser to mutual funds and employees’ securities companies pursuant to the Investment Company Act of 1940. The SEC order finds, however, that the Credit Suisse Entities continued serving in these prohibited roles until the Commission granted them time-limited exemptions on June 7, 2023. Credit Suisse was acquired by UBS Group AG on June 12, 2023.

“Today’s action holds the Credit Suisse Entities accountable for not complying with eligibility requirements,” said Corey Schuster, Asset Management Unit Co-Chief. “This action reinforces the need for entities to properly monitor for events that may cause disqualification and proactively seek and obtain waivers from the Commission before becoming disqualified, or refrain from performing prohibited services.”

Without admitting or denying the SEC’s findings, the Credit Suisse Entities agreed to pay more than $6.7 million in disgorgement and prejudgment interest and civil penalties totaling $3.3 million.

The SEC’s investigation was conducted by Cynthia Storer Baran and Bradley Lewis and was supervised by Jeffrey Shank, Mr. Schuster, and Andrew Dean, all of the Division of Enforcement’s Asset Management Unit.