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Switzerland’s notorious belt-and-braces approach to commercial conduct within its long-established and world renowned banking sector has resulted in the Coop Bank receiving a reprimand from FINMA, the Swiss national financial markets regulator.
In this particular case, FINMA discovered that between 2009 and 2013, the Coop Bank manipulated the market price of its own bearer shares. Swiss authorities considered that these actions constituted a serious violation of supervisory provisions on market manipulation and an infringement of its organisational and business conduct requirements. This conclusion has resulted from the enforcement proceedings conducted by the regulator. The supervisory authority has imposed special conditions on the Coop Bank and issued the former CEO with an order prohibiting him from acting in a management capacity at any supervised institution. FINMA recognises the measures that have since been taken by the bank.
FINMA conducted an in-depth investigation of market conduct at a number of banks which was directly aimed at examining proprietary trading of listed shares on a Swiss exchange. The supervisory authority found significant irregularities at the Coop Bank. Enforcement proceedings initiated against the Coop Bank in March 2014 concluded that the bank inadmissibly propped up the market price of its own shares from the summer of 2009 to the spring of 2013. The bank’s actions constituted a serious violation of the ban on market manipulation under supervisory law.
Support buying to prop up own securities
From the summer of 2009 to the spring of 2013, the Coop Bank influenced normal market pricing of its own bearer shares. The bank bought its own securities over a considerable period of time in order to counteract a fall in price. In particular, before and during the publication of business results, as well as at month and year-end, the bank propped up the exchange price of bearer shares. Neither the Coop Bank nor its staff made any personal financial gains through these actions.
FINMA imposes special conditions
In its handling of proprietary trading, the Coop Bank seriously violated supervisory provisions on market conduct, as well as its organisational and business conduct requirements. As set out in its final decision of 24 October 2014, FINMA has subsequently imposed special conditions on the bank. In addition, separate proceedings were conducted against the bank’s former CEO who was mainly responsible for the market manipulation. He has been issued with an order prohibiting him from acting in a management capacity at any supervised institution for a period of three years.
For the full announcement from FINMA, click here.