Press Release

November 13, 2017

Contact: Richard Loconte, 212-709-1691


Credit Suisse Traders Engaged in Efforts to Manipulate Prices, Profited at the Expense of Clients, and Improperly Shared Customer Information

Credit Suisse Executives Encouraged Traders to Engage in Front Running, Which Deceived and Disadvantaged Customers

The Bank Will Also Engage a Consultant Approved by DFS to Review and Report Agreed Upon Remedial Efforts to DFS

Financial Services Superintendent Maria T. Vullo today announced that Credit Suisse AG agreed to pay a $135 million fine as part of a consent order with the New York State Department of Financial Services (DFS) for violations of New York banking law, including improper efforts with other global banks, front-running client orders, and additional unlawful conduct that disadvantaged customers.  The violations announced today stem from an investigation by DFS determining that from at least 2008 to 2015, Credit Suisse consistently engaged in unlawful, unsafe and unsound conduct by failing to implement effective controls over its foreign exchange business.  As part of the consent order, Credit Suisse will also engage a consultant, subject to approval by DFS in its sole discretion, to review and report to the Department about the bank’s remedial efforts with regards to its FX business.

“Certain Credit Suisse executives in the bank’s foreign exchange unit deliberately fostered a corrupt culture that failed to implement effective controls in its foreign exchange trading business, which allowed the bank’s foreign exchange traders and others to violate New York State law and repeatedly abuse the trust of their customers over the course of many years,” said Superintendent Vullo.  “DFS will not tolerate any violations of law that threaten the integrity of our markets and undermine customer confidence.”

The DFS investigation found that for many years, Credit Suisse foreign exchange traders participated in multi-party electronic chat rooms, where traders, sometimes using code names to discreetly share confidential customer information, discussed coordinating trading activity and attempted to manipulate currency prices or benchmark rates.  By improperly working together, these traders sought to diminish competition among banks, allowing these banks and traders to reap higher profits from the execution of foreign exchange trades at customers’ expense.  Credit Suisse traders also engaged in improper activity by sharing of confidential customer information, again enhancing their own profits to the detriment of customers.

“Building ammo,” a manipulative practice used by Credit Suisse and other banks, involved an agreement among traders at different banks to allow a single, designated trader to take on multiple orders from the other participants.  This ensured that multiple traders minimized their risks by staying out of each other’s way, especially during the potentially chaotic trading around a fixing window.  Allowing a designated trader to build and deploy “ammo” provided the designated trader enhanced market power and to push the price of a currency pair in a direction benefitting the traders involved.

The DFS investigation also found that front-running – trading ahead of known client orders – was encouraged by executives of eFX, Credit Suisse’s electronic trading platform.  From at least April 2010 to June 2013, Credit Suisse employed an algorithm designed to front-run clients’ limit and stop-loss orders.  Credit Suisse programmers designed the algorithm to predict the probability that a client’s limit or stop-loss order would be triggered.   Credit Suisse traders would apparently enter the market with that information, knowing that the market might move in a specific direction if the stop-loss or limit order was triggered.  From April 2010 through June 2013, Credit Suisse executed approximately 31,000 limit orders and 41,000 stop-loss orders that may have been a source of profit through front running.  Additionally, because front-running can occur on orders that ultimately remain unfilled, Credit Suisse may have profited as well from front running many tens of thousands of additional client orders.

The DFS investigation also discovered that the bank expanded use of the “last look” functionality in its electronic trading platform to improve profit, improperly disadvantaging customers, without sufficiently disclosing to them how the bank’s electronic trading was conducted. In addition, Credit Suisse misled customers about the existence and extent of its use of “last look” and implemented a transparency initiative related to the function only after negative press reports.

Under the consent order announced today, Credit Suisse will take remedial actions to prevent the conduct from re-occurring and will submit plans to DFS to improve senior management oversight of the company’s compliance with New York State laws and regulations relating to the company’s foreign exchange trading business.  The bank will also enhance internal controls and compliance, and improve its compliance risk management program with respect to its foreign exchange trading business; and enhance its internal audit program with respect to its compliance with applicable laws and regulations, as well as its internal policies and procedures.

Credit Suisse will also engage a consultant for one year, subject to approval by DFS in its sole discretion, to review and report to the Department about the bank’s remedial efforts with regards to its FX business, including:

  • The bank’s compliance with applicable New York State and federal laws and regulations;
  • The bank’s compliance with recognized FX industry best practices;
  • The bank’s creation of enhanced policies and procedures governing the FX business, and its compliance with those policies and procedures; and
  • The bank’s maintenance of an honest, ethical, and fair FX business.

Credit Suisse must also submit to DFS a written progress report detailing all actions taken to secure compliance with the provisions of the consent order eighteen months and twenty-four months after the order’s execution.

Credit Suisse does business in the U.S. through a foreign bank branch in New York State that is licensed and regulated by DFS, as well as through other affiliates.  The New York branch holds assets of approximately $42 billion.  Credit Suisse conducts foreign exchange trading operations in New York, London, and other global foreign exchange hubs.

A copy of the consent order can be found here.