Cease and desist orders and activity bans

Where FINMA identifies financial market participants operating without the requisite authorisation, it can issue a ruling expressly banning those responsible from continuing to operate. It also has the power to impose an activity ban on persons trading in financial instruments on behalf of a supervised institution who have seriously violated the applicable standards. . An activity ban can also be imposed on client advisers employed by a supervised institution if they seriously violate the applicable standards.
FINMA can issue a ruling banning individuals responsible for violations by financial intermediaries from conducting unauthorised financial market activities themselves or through third parties or from advertising such activities in any form. A ban of this kind normally concerns a company’s ultimate management, owners and senior staff, but other individuals who have contributed substantially to unauthorised activities can also be banned. FINMA often combines a cease and desist order with the threat of a fine under Article 48 FINMASA and publication of the final ruling under Article 34 FINMASA.

Effects of a cease and desist order

Such orders are intended to warn or remind individuals not to engage in activities requiring authorisation. Those concerned – together with the general public if details are published – are merely reminded of the law. FINMA aims first and foremost to warn investors about these individuals.

Activity bans

Article 33a FINMASA allows FINMA to ban individuals temporarily or permanently from trading in financial instruments if they have committed a serious violation of financial market laws, implementing ordinances or a company’s internal rules. FINMA can also ban a person from acting as a client adviser at a supervised institution temporarily or permanently. In addition to staff in senior functions and those bound by proper business conduct requirements, all employees who perform a corresponding activity can be sanctioned in this way.
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