Market abuse

Two tracks: criminal law and supervisory law

Swiss law combats market abuse on two tracks. The first is criminal law, which punishes intentional insider dealing and price manipulation and is enforced by the prosecuting authorities before the criminal courts. The second is supervisory law, which prohibits the same conduct in broader terms, applies to all market participants and is enforced by FINMA through administrative proceedings. The two tracks overlap, since the same conduct may be both a crime and a breach of supervisory law, yet they pursue different aims. Criminal law punishes the individual for culpable conduct, while supervisory law protects the functioning of the market and does not require proof of intent in the criminal law sense.

The supervisory prohibitions were originally addressed only to supervised institutions. With the revision of the Stock Exchange Act that entered into force in 2013, they were extended to all market participants, whether natural persons or legal entities and whether or not they are subject to prudential supervision.¹ FINMA states that it investigates and sanctions insider trading and market manipulation by all market participants, while the Office of the Attorney General of Switzerland is responsible for prosecuting criminal offences involving market abuse. The two authorities coordinate from an early stage of their investigations.²

The supervisory prohibitions

Article 142 of the FinfraG prohibits the exploitation of insider information. Anyone acts unlawfully who has insider information, or a recommendation based on insider information, and who knows or should know that it is such information, and who uses it to acquire or dispose of securities admitted to trading on a Swiss trading venue or derivatives relating to them, discloses it to another person or uses it to recommend a transaction to another person. The Federal Council may define permissible conduct, in particular for transactions preparing a public takeover offer.³ Article 143 prohibits market manipulation. Anyone acts unlawfully who publicly disseminates information that he knows or should know gives false or misleading signals as to the supply of, demand for or price of securities admitted to trading on a Swiss trading venue or DLT trading facility, or who carries out transactions or orders that he knows or should know give such signals. The Federal Council defines permissible conduct, in particular for price stabilisation and buy-back programmes.⁴

The formula “knows or should know” marks the difference from criminal law. A market participant who acts negligently in using insider information or in sending misleading signals breaches supervisory law even if no criminal offence has been committed. The standard of proof in administrative proceedings is also less demanding than in criminal proceedings. FINMA does not impose fines on individuals, however. Its instruments include declaratory rulings, the disgorgement of profits, the publication of final rulings, the appointment of investigating agents and, for supervised persons, industry bans and activity bans.⁵ For employees of banks and asset managers, an industry ban can end a career in the Swiss financial sector, which makes the supervisory track a serious deterrent even without fines.

The criminal offences

The criminal provisions are found in Articles 154 and 155 of the FinfraG. Insider dealing is punishable with a custodial sentence of up to three years or a monetary penalty where a body or member of a governing body, a holder of a shareholding, or a person with access to insider information by reason of his activity uses the information to obtain a pecuniary advantage for himself or another. Where the pecuniary advantage exceeds one million francs, the penalty is a custodial sentence of up to five years or a monetary penalty. A lower range of penalties, with a custodial sentence of up to one year or a monetary penalty, applies to the disclosure of insider information and to its exploitation by persons who received it from a primary insider. Any other person who exploits insider information that has come to him by chance is liable to a fine.⁶ Price manipulation is punishable with a custodial sentence of up to three years or a monetary penalty where the offender, with the intention of substantially influencing the price of securities in order to obtain a pecuniary advantage, disseminates false or misleading information or carries out purchases and sales that are directly or indirectly for the account of the same person or of persons connected for that purpose. A pecuniary advantage of more than one million francs raises the maximum penalty to five years.⁷

The prosecution and adjudication of insider dealing and price manipulation under Articles 154 and 155 are subject to federal jurisdiction.⁸ The Office of the Attorney General of Switzerland in Bern conducts the investigations, while the Federal Criminal Court in Bellinzona decides at first instance. The concentration of jurisdiction at federal level dates from the revision of 2013. Before that date, the cantons were responsible, so that the most important insider cases were investigated by the public prosecutor of the canton of Zurich, where most of the banks and traders involved were located. The centralisation reflected the view that the complexity of these cases, which often require international mutual assistance and the analysis of large volumes of trading data, exceeded the resources of cantonal authorities.⁹

Enforcement in practice

The practical enforcement of the market abuse rules begins with surveillance. The Surveillance and Enforcement unit of SER monitors trading on the Swiss exchange in real time, analyses unusual price movements before the publication of price-sensitive information and reports suspicions to FINMA and, where there are indications of a criminal offence, to the prosecuting authorities.¹⁰ FINMA then decides whether to open proceedings, often in coordination with the Office of the Attorney General. Where foreign investors or accounts are involved, both authorities rely on international administrative and mutual legal assistance, including requests to and from the United States Securities and Exchange Commission and European regulators.

The record of criminal enforcement has been modest compared with the volume of trading. Insider cases are difficult to prove, since the prosecution must show that the accused possessed insider information at the time of the transaction and used it, and convictions have been comparatively rare. Supervisory enforcement has been more effective. FINMA has repeatedly concluded proceedings against employees of banks and against private individuals, ordering the disgorgement of profits and, where the persons concerned worked in the financial sector, imposing industry bans. The dual system therefore functions in practice with a division of labour: the criminal track for serious cases with clear evidence of intent, the supervisory track for the broader range of misconduct.

For the international client, two features of the Swiss system deserve particular attention. The first is that Swiss prohibitions apply to trading in securities admitted to trading on a Swiss trading venue, whoever the trader is and wherever he is located. A foreign investor who trades in Swiss shares on the basis of insider information is therefore exposed to Swiss proceedings, and Swiss authorities cooperate closely with their foreign counterparts. The second is that the end of banking secrecy in its traditional form, described in Part G of this book, has removed the obstacle that once made Swiss accounts attractive for insider trading in foreign markets. Requests for administrative assistance from foreign supervisory authorities are granted under the conditions of the Financial Market Supervision Act. The transmission of client data to foreign authorities for market abuse investigations has become routine.

Notes

FINMA, media release of 27 March 2013 on the consultation on the circular on market conduct rules, https://www.finma.ch/de/news/2013/03/mm-anhoerung-rs-marktverhaltensregeln-20130327/, stating that the revised Stock Exchange Act in force from 1 May 2013 created supervisory prohibitions of market abuse applicable to all natural and legal persons; Mondaq, “Revision of the Stock Exchange Act: New Rules on Insider Trading”, https://webiis08.mondaq.com/commercial/252046/revision-of-the-stock-exchange-act-new-rules-on-insider-trading, on Arts. 33e and 33f BEHG. ↩
FINMA, “General market supervision regarding insider trading and market manipulation”, https://www.finma.ch/en/enforcement/market-supervision/market-abuse/. FINMA lists among its sources reports from the surveillance units of the exchanges, its own market monitoring, information from ongoing supervision, foreign authorities, third parties and the press. ↩
FinfraG, Art. 142, https://www.droit-bilingue.ch/de-fr/9/95/958.1-142-151.html. ↩
FinfraG, Art. 143, https://www.droit-bilingue.ch/de-fr/9/95/958.1-143-152.html. ↩
FINMA, “General market supervision regarding insider trading and market manipulation”, https://www.finma.ch/en/enforcement/market-supervision/market-abuse/. ↩
FinfraG, Art. 154 paras. 1–4, https://www.droit-bilingue.ch/de-fr/9/95/958.1-154-163.html. ↩
FinfraG, Art. 155 paras. 1–2, https://www.droit-bilingue.ch/de-fr/9/95/958.1-155-164.html. ↩
FinfraG, Art. 156 para. 1, https://www.droit-bilingue.ch/de-fr/9/95/958.1-156-165.html. Under para. 2, the prosecution of offences under Art. 147 (breach of professional secrecy) lies with the cantons. ↩
Mondaq, “Revision of the Stock Exchange Act: New Rules on Insider Trading”, https://webiis08.mondaq.com/commercial/252046/revision-of-the-stock-exchange-act-new-rules-on-insider-trading, which reports that from 1 May 2013 the Office of the Attorney General of Switzerland and the Federal Criminal Court replaced the cantonal authorities in the prosecution of insider dealing and market manipulation. ↩
SIX Exchange Regulation, “We regulate the Swiss stock exchange”, https://www.ser-ag.com/en/about.html. ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of September 2025.

English

Contact

Dr Alexander Ressos, TEP

Rechtsanwalt/Attorney-at-Law

I am a Swiss attorney-at-law and also admitted as a solicitor in Hong Kong and in England & Wales, with almost 25 years of experience.

Together with my multilingual team, including Chinese, Japanese, Korean, Russian, Ukrainian and French native speakers, I advise companies and their owners from around the world on the full range of banking, corporate, commercial and tax law matters in Switzerland, including international tax planning, fiduciary services, and legal family office services including immigration & relocation or real estate investments. My practice has a particular focus on clients from growth and frontier markets in Greater China, Central Asia and the Caucasus, the rest of Asia, the Middle East, Africa and Latin America, and I equally advise clients from Europe and North America. Through an affiliated Swiss trust company, we also take care of the incorporation and ongoing administration of their companies and other structures, including accounting, tax returns and corporate secretarial services, and I serve as a professional director where required. With the support of a network of first-class cooperation partners, I also implement solutions worldwide.

My approach is to act as a trusted advisor who works directly with decision-makers, on an equal footing: I start from what you want to achieve and shape every structure, contract and tax decision around your commercial goals and how it improves your after-tax return. As “lawyers who make it happen”, my team and I stay involved until your company is set up, your structure is in place and your transaction has closed, and we remain available for any follow-on work that may be required. You benefit from bespoke solutions and personal attention, and sound, friendly and practical advice. We are not the lowest-cost provider in the market, nor do we intend to be; our aim is to deliver well-founded, proper solutions and excellent value for money.

Get in touch →