Watchdog fines CSFB £540,000

ROGUE traders at London-based arms of investment bank Credit Suisse First Boston overstated profits without detection for eight months and misled clients into buying loss-making products, the Securities and Futures Authority has said.

Fining the group a total of £540,000 and ordering it to pay £40,000 in costs, the SFA said it had levied a £400,000 fine on CSFB International for selling loss- making derivatives to two clients. It said the fine was the third largest it had ever imposed.

In another action, the regulator fined CSFB Europe £140,000 for allowing trader Mushtaq Shah to overstate profits at the convertible bond trading desk between August 1998 and April 1999.

Shah has been suspended from the SFA register for a year, fined £50,000 and ordered to pay £10,000 in costs. The Financial Services Authority is still investigating the trader who mis-sold the derivatives.

The SFA also fined broker Capel Cure Sharp, now part of Old Mutual's Gerrard, a total of £700,000 for failing both to maintain accurate customer accounts and to properly investigate pensions mis-selling.

The SFA said it was the second largest fine ever levied against a firm. It also said the company had botched customer account balances for a 10-month period at the top of the equity bull market from May 1999 to March 2000 and fined it £500,000.

It said that Capel Cure Sharp's original £150,000 estimate due for pensions misselling should actually have been £3m, and fined it £200,000.