IIROC settles with Credit Suisse Securities

A hearing panel of the Investment Industry Regulatory Organization of Canada (IIROC) has accepted a settlement agreement, which includes sanctions, between IIROC staff and Credit Suisse Securities (Canada) Inc.

In this agreement, Credit Suisse admits that it violated the Universal Market Integrity Rules (UMIR) by failing to comply with its trading supervisory obligations. The firm admits that in certain cases between May 2007 and October 2007, a monthly review of trading activity for possible manipulation of security prices at the market’s close was either not conducted within a reasonable period or at all. Credit Suisse also failed to properly scrutinize a particular client’s Direct Market Access (DMA) account which had been generating “red flag warnings” in earlier reviews for possible artificial pricing.

Credit Suisse has agreed to pay a $150,000 fine and $15,000 in costs.

In particular, Credit Suisse admits that it violated UMIR 7.1(1) and UMIR Policy 7.1 by failing to:

• Conduct artificial pricing reviews within a reasonable period of time for the months of May 2007, June 2007, and July 2007;
• Conduct an artificial pricing review for October 2007; and
• Question a particular client until December 27, 2007, despite the fact that the firm’s artificial pricing reviews for August, September and November 2007 generated red flag warnings that a particular Direct Market Access (DMA) account was using algorithms to execute buy orders that appeared to create artificial prices.

In accepting the Settlement Agreement, the IIROC Hearing Panel said it was satisfied that the deficiencies in Credit Suisse’s trade supervision for artificial pricing had been remedied.

IIROC began its formal investigation into the conduct of Credit Suisse Securities (Canada) Inc. on November 13, 2008. Credit Suisse is currently an IIROC-regulated firm.

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