OCC Call for More Disclosure In Credit Suisse Case Is Seen

of the Currency over the details of derivatives risk disclosure rules has prompted a prominent attorney to warn that regulators are trying to micromanage the derivatives business. At issue are the generic disclosure forms some derivatives dealers have developed at the urging of securities and exchange regulators in response to the widely publicized losses on derivatives investments in the past year. Deputy Comptroller Douglas E. Harris has criticized a disclosure form prepared by Credit Suisse Financial Products, a London-based bank, as inadequate, prompting the unit of CS Holdings to shoot off a letter to Mr. Harris defending the forms as a useful first line of defense in derivatives deals. The attorney, John P.C. Duncan of Jones, Day, Reavis & Pogue in Chicago, said Mr. Harris' position on the need for additional disclosure creates new risks for banks. For one, he said the OCC runs the risk of micromanaging banks' derivatives operations and ultimately hurting the flexibility of the market. Further, "In an attempt to limit the exposure of banks by encouraging them to provide full disclosure, the OCC will actually increase the risk by imposing disclosure duties they would not otherwise have," he said. Mr. Harris said the agency wanted to alert banks to the potential pitfalls of relying on such generic disclosures. "We thought it was important to get our views on generic risk disclosures out there before bank dealers started to rely on them too much," he said. In an interview, Stephen Green, general counsel of the Credit Suisse unit, said the generic disclosures are not intended to answer all the questions raised in specific transactions. "If the question is whether these disclosure statements are by themselves the answer, than I would have to say, no, they are not," he said. "The question really is whether these documents are a helpful component of a well-designed program of risk disclosure. I feel strongly that they are." While Mr. Harris said this is a different position than the one the company spelled out in its disclosure, he welcomed Mr. Greene's comment. "It seems they have an evolving view of the utility of this document," Mr. Harris said. "It's ultimately good if these documents are used with something to disclose the specific risks of a transaction."