FSA opens inquiry into CSFB compliance

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The Independent Online

Credit Suisse First Boston, the investment bank, is being investigated by the Financial Services Authority over possible lapses in its compliance function following the integration of Donaldson, Lufkin & Jenrette, the US counterpart it acquired last year.

The Securities and Futures Authority, now part of the FSA, is understood to be assessing management controls in CSFB's operations based in London's Canary Wharf. The FSA routinely monitors investment banks' compliance controls, which keep corporate advisory activities separate from trading operations. It conducts special investigations when any impact of a breakdown in controls is judged either highly likely or highly serious.

On Tuesday, Howard Davies, the FSA's chairman, warned financial services firms against using cutbacks in back-office functions to achieve cost savings as economic growth slows. "Over the past year, we have disciplined a wide range of institutions, many of them household names, for back-office administrative failures," he said. "The one common feature in these cases seems to us to be that firms were not giving a high enough priority to these important back-office functions."

A spokesman for CSFB said yesterday: "The FSA conducts reviews of all the banks that it regulates, and CSFB is no exception."

The FSA declined to comment on the investigation.

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