CSFB has been fined a total of 540,000 (€871,425) and reprimanded for management failings by the Securities and Futures Authority (SFA), a subsidiary of the Financial Services Authority (FSA), the UK financial regulator. The bank will also pay 40,600 towards the SFA's costs.
Shah, previously head of the convertible bond trading desk at CSFB (Europe), has been suspended from the SFA register for one year from April 1, 2001, fined 50,000 and will pay 10,000 towards the SFA costs.
He overstated his month-end profits from August 1998 to April 1999 and the SFA said that the "fact that he was able to do this for so long constitutes a failure of management at the firm".
The second trader was at CSFB International and "provided two customers with misleading documentation and inaccurate valuations of complex derivatives that CSFB sold them between February 1998 and June 1999". This meant that customers were misinformed about the risks of these derivatives and were not told of substantial losses they were making by holding them. The trader was fired and the deals were cancelled once senior management at CSFB discovered the problems.
In a separate case, Capel Cure Sharp, an independent stockbroker now trading as Gerrard, has been fined a total of 700,000 for not reconciling a bank account within the required timeframes and not adequately managing its review of pensions sold.