Profit disgorgement orders

FINMA can confiscate profits generated or losses avoided through serious violations of supervisory law by supervised institutions or individuals in senior functions. Any confiscated assets that do not have to be paid out to injured parties are passed to the federal government.

Article 35 FINMASA empowers FINMA to confiscate illegal profits so as to ensure fairness and equal treatment among market participants, thus protecting creditors, investors and policyholders and strengthening the proper functioning of financial markets. As well as having a preventive effect, confiscation serves to restore compliance with the law by eliminating illegal advantages.

Individuals and legal entities affected

Profits can be confiscated from supervised institutions or individuals in senior functions, for instance directors, executives and other managers. Furthermore under the Stock Exchange Act, any individual or legal entity committing a serious violation of the ban on market manipulation and insider trading or the disclosure requirements can also have profits confiscated.

Amount disgorged

FINMA has the power to issue disgorgement orders for unlawfully generated profits and any losses avoided. The law allows FINMA to estimate the profit generated or loss avoided if calculating it precisely is impossible or entails a disproportionate effort, which is often the case.