Investment bank Credit Suisse First Boston International (CSFBi) has been hit with a record fine for trying to mislead Japanese tax and regulatory authorities.

Ensuring that firms... prevent this type of behaviour is essential to maintaining the confidence... in our financial markets Carol Sergeant, FSA

The �4m ($6.2m) fine is the largest to be imposed by the UK regulator, the Financial Services Authority (FSA), so far.

The FSA said that between 1995 and 1998, CSFBi had tried to mislead the Japanese authorities by not disclosing the full extent of its business in the country.

The fine is the latest blot on the Swiss bank's copybook, after allegations of fraud in the US.

Serious issue

CSFBi is a unit of the Swiss financial services giant Credit Suisse Group, but CSFBi is authorised in the UK and therefore regulated by the FSA.

The FSA said the "unprecedented size of the fine" reflected its belief that any attempt to mislead investors, whether in the UK or in other countries, was "an extremely serious issue".

The regulatory body suggested CSFBi, at the time known as Credit Suisse First Products (CSFP), gave false explanations for its business activities in Japan.

The FSA said: "CSFP feared that the Japanese financial regulator might conclude it was doing business without the necessary Japanese licence.

"CSFP also thought that the tax authority might decide that this business should be taxed in Japan."

The FSA said it had taken into account the fact that a number of staff involved in the issue had since left the firm and that it had since made significant improvements in "standards of ethics and professionalism".

Nonetheless, Carol Sergeant, the FSA's managing director for enforcement, said: "Ensuring that firms have organisational cultures that prevent this type of behaviour is essential to maintaining the confidence we all expect to have in our financial markets."

Latest scandal

In October, the US state of Massachusetts brought allegations of fraud against the US division CSFB for allegedly giving bad advice to small investors.

The state is seeking damages of �1.3m for what it alleges was tainted advice on stocks for smaller shareholders, in order to keep clients and gain new ones.

CSFB was also part of investigations into the Enron scandal.

Reports suggested the bank was a key to creating partnerships for the bankrupt energy giant.

The largest fine imposed previously by the FSA was a �1.35m penalty for Royal & Sun Alliance over pension mis-selling.