Credit Suisse sacks traders involved in mispricing

Credit Suisse has sacked or suspended the traders behind the mispricing that cost it a $2.65 billion writedown last month.

The bank said today that its internal review had found the writedown of asset-backed securities positions held by its collateralised debt obligation trading business was only $2.65 billion, less than the $2.85 billion it originally announced on February 19.

"The pricing errors were, in part, the result of intentional misconduct by a small number of traders. These employees have been terminated or suspended and are being disciplined under local employment law. The review also found that the controls put in place to prevent or detect this activity were not effective," the bank said in a statement.

It plans to overhaul control and risk management measures and reorganise the CDO trading business. The losses will be spread across the fourth quarter of 2007 and the first quarter of 2008 - Credit Suisse now expects to make a loss in Q1. The news implies, as chief risk officer Wilson Ervin suggested last month, that the mispricing had been going on for several months before it was detected in mid-February.

See also: Credit Suisse reveals $2.85bn subprime credit writedown