General market supervision: insider trading and market manipulation
FINMA sanctions insider trading and market manipulation under the Financial Market Infrastructure Act (FinMIA). It can enforce the rules on market abuse in FinMIA, the Financial Market Infrastructure Ordinance (FinMIO) and in particular FINMA Circular 2013/8 "Market conduct rules" against all market participants, both individuals and legal entities, regardless of whether or not they are subject to prudential supervision. FINMA deals with violations by authorised institutions and their staff on the Swiss securities market, as well as severe market abuse on similar markets in Switzerland and abroad.
Investigations and enforcement proceedings
FINMA investigations into market abuse are triggered by:
- reports from monitoring units at exchanges
- FINMA’s own market monitoring
- information obtained in the course of normal supervision and from foreign authorities, third parties or the press.
FINMA investigates all substantiated indications of market abuse, for instance by examining documents supplied by exchanges or requested from the banks and market participants involved. Besides account documentation, organisation charts, internal directives and securities journals, it can also request disclosure of phone calls and electronic correspondence made by securities trading staff, as well as information and statements from those concerned. Investigations conclude with either a proposal to initiate enforcement proceedings or a final report.
FINMA conducts in-depth investigations and, where appropriate, enforcement proceedings primarily concerning serious violations of market integrity and suspected market manipulation (without a suspicion of criminal price manipulation), and where licence holders are involved.
Possible corrective measures
FINMA can issue declaratory rulings, confiscate or order the disgorgement of illegally generated profits and publish final rulings where the ban on market manipulation and insider trading has been seriously violated. However, the full range of enforcement instruments set out in Articles 29-37 FINMASA can be applied at all times to institutions such as banks and securities firms that are subject to prudential supervision. This involves appointing investigating agents and issuing individuals with an industry or activity ban.
Criminal complaints
FINMA is obliged to inform the competent prosecution authority about any criminal activity that comes to its attention. As elements of insider trading and market or price manipulation as supervisory and criminal offences in the Financial Market Infrastructure Act are largely the same, FINMA coordinates its investigations with the Office of the Attorney General from an early stage on an ongoing basis.
