Dispute with SEC Could Fade If Swiss Forbid Insider Trading
Whelpton, Eric, American Banker
ZURICH -- Changing Swiss law on insider trading will solve "90% of the problems" between Swiss banks and financial regulators in the United States, says Nikolaus Senn, chairman of the Union Bank of Switzerland.
Legislation making insider trading a crime here, as it is in the United States, may be enacted by the Swiss parliament by autumn.
"We want to get this over with as quickly as possible," Mr. Senn says. "All the banks are for it, and, once we have it in our law, we shall be able to cooperate much more closely with the securities and Exchange Commission and other regulatory agencies."
Swiss law allows banks to reveal data to foreign investigators only if criminal action under Swiss law is involved.
"We are also going to try to change our laws so that declaration of banking information to third parties is widened in cases where criminal activities are involved," he says. And Mr. Senn would like to see the disclosure rule extended to financial firms and foreign banks operating in Switzerland. As it now stands, the law applies only to Swiss banks. "Even lawyers should be covered by this legislation," he said. "They handle financial transactions, too."
But while changes in the insider law would smooth relationships with the SEC, other problems remain.
Mr. Senn cited U.S. moves to beef up the SEC's power to investigate and prosecute those dealing in U.S. securities from foreign bases. The Swiss Bankers Association is firmly against such "waiver by conduct" legislation, calling it "a unilateral American measure ... which cannot be an appropriate solution to an international problem."
Among other things, the SEC has complained that requests for data on Swiss bank accounts through which insiders may have illegally traded shares in the St Joe Minerals Corp. and the Santa Fe Corp. have long gone unanswered.
Mr. Senn said he was convinced these problems would be ironed out in negotiations with the SEC during the course of the coming year. The Swiss Justice Ministry is studying ways of changing the law to speed up legal proceedings stemming from requests for information from abroad. …