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Swiss regulator fines ex-bank chief over ‘serious’ insider trading

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Via Financial Times

Switzerland’s markets watchdog has found the former chief executive of one of the country’s banks guilty of “serious” insider trading offences, ordering him to pay back SFr730,000 ($752,000) in illegal profits. 

Finma did not disclose the name of the individual concerned when it announced the action on Friday. 

“During his time in office as an executive board member or as CEO he executed transactions through deposit accounts held in his wife’s name at other banks and thus violated the bank’s internal directives,” the regulator said. 

The chief executive had “repeatedly and systematically” violated supervisory law, citing instances of insider trading, it added.

The individual used his wife’s account to trade on sensitive market information about companies that were clients of the bank and which he gained access to in his position. 

“Besides conducting insider trading the person concerned systematically breached the bank’s internal directives as well as directives recognised by Finma as a minimum standard over a period of many years through other private trading activities,” Finma said. 

As well as the confiscation order, Finma — which does not have the authority to make criminal charges — has issued a four-year ban on the person from undertaking any management role in finance and a six-year ban on his licence as a securities dealer.

The case will draw comparisons with the scandal surrounding the former chairman of Switzerland’s central bank, Philipp Hildebrand, who was forced to resign in 2012 amid allegations of insider trading perpetrated in his wife’s name. Mr Hildebrand did not face formal sanction and denied any wrongdoing.

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Switzerland has more than 250 banks, according to government statistics. Finma did not disclose whether the executive involved in its judgment was at a systemically important institution. 

The regulator is known for its discreet policing of Switzerland’s finance sector with interventions to ensure compliance usually undertaken in private. Cases are publicised only in exceptional circumstances and individuals, even when enforcement actions are made openly, are often left unnamed.

Critics argue the approach perpetuates an unhealthy culture of cover-up and secrecy in Swiss finance. 

In its report on Switzerland’s financial system released in November, the OECD said Finma needed more resources and greater openness. “The application of Switzerland’s regulations should be transparent to facilitate review,” it said. 

Patric Eymann, head of Finma’s enforcement division, said: “Insider trading undermines confidence in the market. We will therefore continue to rigorously investigate any evidence of violations of supervisory law.”

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