On February 21, 2014, the SEC settled charges against Zurich-based Credit Suisse Group AG for violating the federal securities laws by providing cross-border brokerage and investment advisory services to U.S. clients without first registering with the SEC. According to the SEC’s order, Credit Suisse provided cross-border securities services to thousands of U.S. clients and realized approximately $82 million in pre-tax income from these services without adhering to the registration provisions of the federal securities laws. During the relevant period, Credit Suisse relationship managers traveled to the U.S. to solicit clients, provide investment advice, and induce securities transactions, but the relationship managers were not registered to provide brokerage or advisory services, nor were they affiliated with a registered entity. The relationship managers also communicated with clients in the U.S. through e-mails and phone calls.
According to the SEC’s order, it was not until after a much-publicized civil and criminal investigation into similar conduct by Swiss-based UBS that Credit Suisse began to take steps in October 2008 to exit the business of providing cross-border advisory and brokerage services to U.S. clients. Although the majority of U.S. client accounts were closed or transferred by 2010, it took Credit Suisse until mid-2013 to completely exit the cross-border business as the firm continued to collect broker-dealer and investment adviser fees on some accounts.
The SEC’s order found that Credit Suisse willfully violated Section 15(a) of the Exchange Act and Section 203(a) of the Advisers Act. Credit Suisse admitted the facts in the SEC’s order, acknowledged that its conduct violated the federal securities laws, accepted a censure and a cease-and-desist order and agreed to retain an independent consultant. Credit Suisse also agreed to pay $82 million in disgorgement, $64 million in prejudgment interest, and a $50 million penalty.