Credit Suisse receives record fine over Archegos failures
Credit Suisse provided prime brokerage services to Archegos and entered into equity total return swaps with the family office, booking eventual losses of $5.1bn as a result of its collapse.
The fines against Credit Suisse International and Credit Suisse Securities (Europe) are imposed by Swiss regulator FINMA and the Federal Reserve Board, alongside the PRA, with the watchdogs declaring risk management oversight and practices «fell well below the regulatory standards required».
On 26 March 2021, Archegos collapsed, causing international banks to lose $10bn and resulting in the arrest of founder Bill Hwang and former CFO Patrick Halligan on charges of racketeering and securities fraud.
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Credit Suisse provided prime brokerage services to Archegos and entered into equity total return swaps with the family office, booking eventual losses of $5.1bn as a result of its collapse.
The PRA said these losses had caused «significant financial and reputational damage» to the bank, which is now owned by UBS Group.
Credit Suisse's failings in the Archegos scenario breached multiple fundamental rules of the PRA rulebook, the first time an enforcement investigation has established four breaches.
These were: Fundamental Rule 2, which requires that a firm conduct its business with due skill, care and diligence; Fundamental Rule 3, which requires that a firm must act in a prudent manner; Fundamental Rule 5, which requires that a firm must have effective risk strategies and risk management systems; and Fundamental Rule 6, which requires that a firm must organise and control its affairs responsibly and effectively.
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