Commentaries

Obtaining the relevant extracts from the database needed to assess FINMA's guarantees of irreproachable activity (formerly Watchlist) is a real crossroads for an employee who has temporarily given up exercising an activity subject to FINMA. The Federal Administrative Court (FAT) has confirmed that art. 8 aLPD (now art. 25 LPD) does not allow access to the documents that justified inclusion on the Watchlist to the same extent as in a genuine procedure on the merits to determine whether an individual[...]

A recent Geneva ruling illustrates the effects of a residual bank agreement combined with a claims clause when the existence of a client instruction is disputed by the parties in a one-off investment advisory relationship (ruling ACJC/231/2024 of the Civil Division of the Geneva Court of Justice of 13 February 2024). In 2003, a company based in the British Virgin Islands opened a relationship with a Swiss bank. The bank's general terms and conditions provided to the client contained a[...]

Since the adoption of the too-big-to-fail regime in 2011, article 52 BL stipulates that the Federal Council must examine the provisions of articles 7 to 14b BL three years after the system comes into force and then every two years, compare them with the corresponding international standards abroad and report back to the Federal Assembly, if necessary with proposals for amendments to the law or ordinances. In its report on systemically important banks of 4 June 2021 (FF 2021 1487),[...]

A protective criminal sequestration order may appear disproportionate when the proceedings in which it is involved drag on without sufficient grounds. Decision 7B_366/2023 of 14 February 2024 provides a rare illustration of the application of this principle by the Federal Supreme Court. The Federal Court lifted the sequestration orders issued in February 2018 on bank assets, as the Geneva public prosecutor had decided, but contrary to the decision of the cantonal court of second instance. In February 2018, an oil[...]

A bank that wishes to obtain a receivership against its clients in order to recover an overdraft resulting from an unsuccessful margin call and a liquidation of positions must make its claim plausible by means of detailed explanations and documents. Failing this, the judge must refuse - or revoke - the receivership (Federal Court ruling 5A_515/2023 of 23 February 2024). The dispute that gave rise to this judgment arose from a lombard loan granted by a Zurich bank to two[...]

The right of access under the DPA is abused when a person invokes it against a family office to obtain information concerning a trust and the financial situation of his father (ACJC/1610/2023). A very wealthy Italian businessman has a family office in Geneva, which performs various services for his daughter. Payments to her were made from the father's account. The father tells the family office that his daughter has a budget limit of EUR 100,000 per month. The daughter receives[...]

According to a popular German expression, "Totgesagte leben länger. Despite their oft-heralded demise, retrocessions continue to enrich the civil case law of the Federal Supreme Court. However, practitioners are still waiting for the Federal Supreme Court to take a definitive stance on whether retrocessions in execution-only relationships should be subject to restitution. Unfortunately, these hopes were dashed in the ruling presented here (TF 4A_496/2023 of 27 February 2024): "Damit braucht auf die umstrittene Frage, ob grundsätzlich auch im Execution only-Verhältnis[...]

An asset manager who does not comply with the conservative investment strategy agreed with his client is not in breach of his contractual obligations if the client has validly approved the investments (Federal Court ruling 4A_507/2023 of 29 February 2024). In this judgment, the client consults an asset manager to manage part of his assets. Over the years, the client entered into three different management relationships with the service provider. In the third relationship, which gave rise to the dispute,[...]

In a ruling 1C_543/2023 of 7 March 2024, which is intended for publication, the Federal Supreme Court (FSC) confirms its case law concerning the suspension of mutual assistance and the maintenance of sequestration of funds seized in Switzerland in execution of a request submitted by Russia prior to the aggression in Ukraine. It extended the suspension to a sequestration that had already lasted eight years and ruled out the possibility of invoking Article 2 EIMP. The Federal Criminal Court (FCT)[...]

In a ruling 7B_135/2022, the Swiss Federal Supreme Court details the conditions under which commissions resulting from contracts tainted by an offence of unfair competition may be subject to confiscatory measures (art. 70 and 71 of the Swiss Criminal Code). A Swiss public limited company active in private equity proposed, on behalf of a foreign entity, the purchase of shares in a German company operating in the medical sector. The search for new investors generally began with "cold" telephone calls.[...]

On 28 February 2024, the Federal Office of Police's Interdepartmental Coordination Group on Combating Money Laundering and the Financing of Terrorism (Fedpol) presented its second report on the money laundering risks associated with digital assets (i.e. digital assets based on blockchain technology such as Bitcoin or Ethereum). The report is of interest to financial intermediaries active in this area - in particular compliance functions - and proposes various recommendations to improve the fight against money laundering. It also highlights certain[...]

In a ruling dated 16 January 2024 (B_4185/2020), the Federal Administrative Court (FAT) upheld a FINMA decision of 19 June 2020 finding that a Swiss company and one of its directors had, as a group, engaged in unlawful securities trading, in the absence of authorisation, as an issuing house that had offered securities in the form of investment tokens to the public on a professional basis. As part of an initial coin offering (ICO) with a foreign issuer, the Swiss[...]

Do a fund manager's own plans and intentions constitute insider information if he engages in front running? This is the question that the Criminal Affairs Court of the Federal Criminal Court is answering in a case involving a former manager of second-pillar pension funds for employees of the canton of St. Gallen. In July 2022, the Office of the Attorney General of Switzerland (OAG) filed an indictment against a former employee of the Finance Department of the Canton of St.[...]

The Financial Stability Board (FSB) welcomes Switzerland's progress in implementing the Too Big To Fail (TBTF) rules, but stresses that there is still work to be done. Its second peer review report of 29 February 2024 covers the period 2022-2023 and targets systemically important banks (SIBs) operating internationally. The FSB's ten recommendations can be summarised as follows: Increase FINMA's resources quantitatively and qualitatively: in addition to increasing the size of its teams, the FSB recommends a strengthening of expertise to[...]

Employers are not obliged to implement the minimum guarantees of criminal procedure in the context of internal investigations, according to ruling 4A_368/2023 of 19 January 2024. An employee had worked for a bank since 2010. In August 2018, a colleague reported the employee internally for sexual harassment, which led to the opening of an internal investigation. Following the investigation report, the Bank terminated the employment contract. The employee contested his dismissal on the grounds that it was unfair. The Zurich[...]

This year, the general meetings of public-interest companies meeting the criteria of Art. 964a para. 1 of the Swiss Code of Obligations will be asked to approve their reports on non-financial matters in accordance with Art. 964c para. 1 of the Swiss Code of Obligations. In this context, a controversy has arisen over the legal nature of the vote: on the one hand, Novartis and Roche have already organised a consultative vote, while on the other, the Ethos Foundation is[...]

In a recent ruling, the Swiss Federal Supreme Court upheld an insurance company's refusal to cover losses of more than 35 million dollars suffered by a Swiss bank forced to compensate unhappy investors at the end of legal proceedings in Dubai (ruling 4A_440/2022 of 16 November 2023). A bank established in Switzerland has a subsidiary in Dubai, company E. The subsidiary is subject to supervision by the Dubai Financial Services Authority (DFSA) and is authorised to provide certain financial services,[...]

At its meeting on 31 January 2024, the Federal Council adopted the amendments to the CISO and decided that the amendments to the CISA relating to the limited qualified investor fund (L-QIF), adopted on 17 December 2021, would enter into force. As a reminder, the L-QIF is a collective investment reserved for qualified investors within the meaning of the CISA that is not subject to approval or authorisation by FINMA (art. 118a CISA). It may take the form of a[...]

In its decision 4A_350/2023 of 21 November 2023, the Swiss Federal Supreme Court upheld a partial ruling by the Zurich Handelsgericht (HG190111-O), ordering an asset manager to account to a BVG/LPP pension fund for retrocessions received in connection with investments in target funds via two funds of funds. This commentary focuses on the question of the foundation's right to information regarding the retrocessions received by the fund manager (for a description of the facts and the issue of informed approval[...]

Members of the Board of Trustees must recuse themselves from all decisions in which they have a conflict of interest. Their knowledge cannot therefore be imputed to the foundation. This is one of the conclusions reached by the Swiss Federal Supreme Court in ruling 4A_350/2023 of November 21, 2023. A securities dealer (now called a securities firm, cf. art. 41 LEFin) provides asset management services for private and institutional clients. In particular, it manages the assets of a BVG pension[...]

In a recent ruling, the managing director of a bank was unsuccessful in his claim for back pay for untaken vacation, even though he believed he was entitled to it, since the severance agreement he had signed with the bank did not specifically address this issue (TF 4A_496/2022 of November 6, 2023). The facts were as follows: the managing director of a bank received an annual salary of 600,000 francs and was entitled to twenty-eight days' vacation per year. His[...]

On January 31, 2024, the Federal Council published the long-awaited preliminary draft of the revision of administrative criminal law. The consultation procedure will run until May 10, 2024. For the record, administrative criminal law is criminal law, with the distinctive feature that the prosecution and adjudication of offences fall within the remit of a federal administrative authority, which varies according to the field concerned (e.g. the Federal Department of Finance for administrative criminal law offences against financial market laws) (cf.[...]

The Swiss Federal Supreme Court has ruled that tax secrecy takes precedence over the principle of transparency (ruling intended for publication 1C_272/2022, delivered in open court by four votes to one). The origin of this ruling lies in the request of the NGO Society for Threatened Peoples, based on the Transparency Act (LTrans). The NGO was asking the Federal Office of Customs and Border Protection (FOCB) for access to detailed statistics on gold imports by major Swiss importers, for the[...]

The Swiss Federal Supreme Court examines a new case involving a change of fund management and the levying of transfer duties in the canton of Fribourg, confirming previous case law while clarifying who bears the economic burden of taxation (9C_312/2023 of December 7, 2023, intended for publication). The case concerns a real estate investment trust which has changed its fund management. E. SA was registered as a quasi-fiduciary owner of some fifteen properties in the canton of Fribourg and acted[...]

An auditor whose accreditation has been withdrawn asks to be allowed to plead his case in open court; the Federal Administrative Court rejects his request. On appeal, the Federal Court concluded that there had been a violation of the right to a public hearing enshrined in art. 6 par. 1 ECHR, and thus affirmed that the civil aspect of this provision applied to procedures for withdrawal of accreditation (TF 2C_384/2022 of November 14, 2023). The Swiss Federal Audit Oversight Authority[...]

On December 8, 2023, the Federal Council published a Swiss Climate Scores Update, a (slight) update of the Swiss Climate Scores introduced in June 2022. Without making any major changes, the review of this rating system introduces two new features: a new (optional) indicator focusing on the portfolio's investment objectives, to determine the extent to which the portfolio is aligned with the Paris Agreement objective (i.e., to keep the global average temperature increase below 2 C° above pre-industrial levels, and[...]

On December 19, 2023, the Swiss Commission for Fair Trading (Commission) published a new guideline dated November 22, 2023 on the subject of environmental and/or climate-related advertising. Role of the Commission As a reminder, the Commission is an independent institution whose aim is to ensure the self-regulation of advertising communications. Anyone is entitled to lodge a complaint with the Commission concerning commercial communications which they consider to be unfair within the meaning of the Federal Act against Unfair Competition (UWG).[...]

In recent years, staking services have proliferated, and with them the legal issues surrounding them. In order to clarify its practice, particularly with regard to the safekeeping of cryptoactives, FINMA has published Supervisory Notice 08/2023 on staking. FINMA defines staking as the process of blocking cryptoassets at the staking address of a validation node in order to participate in the validation process of a blockchain based on the proof-of-stake mechanism. In return, participants receive rewards. The communication clarifies the interpretation[...]

In ruling 6B_1176/2022 of December 5, 2023, the Swiss Federal Supreme Court overturns the acquittal of the former Chairman of the Board of Directors of a bank by the Court of Appeal of the Swiss Federal Criminal Court on the charge of violation of the duty to report under art. 37 para. 2 AMLA. The background is as follows. Albert was CEO of a bank from September 1, 2008 to September 30, 2012, before becoming Chairman of the Board of[...]

Even if the company carrying out the credit scoring is not the company that ultimately decides whether to grant a loan, it takes an automated individual decision and must therefore inform the data subject (CJEU ruling of December 7, 2023 in case C-634/21, SCHUFA Holding AG). Following the refusal of a loan by a bank, a German national requested various items of information from SCHUFA, the leading German company for credit checks. The refusal of the loan was justified on[...]