Precautionary measures

FINMA takes appropriate precautionary measures where there is a risk to investors, policyholders, creditors or the financial market as a whole. A typical example is appointing an investigating agent. FINMA can deploy additional (protective) measures under bank insolvency law and the reporting obligations set out in the Stock Exchange Act.

Precautionary measures are intended to protect those at risk or maintain the status quo. They are sometimes applied on an interlocutory basis, i.e. without granting a hearing to those concerned. Depending on its suspicions and the evidence available, FINMA can order accounts to be blocked so as to limit the risk to creditors and investors, impose temporary trading restrictions and limit the nature and scope of business activities or ban them outright. 

Investigating agents

Investigating agents clarify the facts relevant for supervisory law and implement the measures ordered by FINMA. Rulings issued by FINMA also state whether and to what extent investigating agents are empowered to act in place of the company’s ultimate management. The individuals concerned have their authorisation temporarily withdrawn while the agent is acting in their place. FINMA also publishes information on the use of an investigating agent on its website if the agent is entered in the Commercial Register.

Protective measures under insolvency law

FINMA can order extra precautionary (protective) measures if there are reasonable grounds to suspect that a bank, securities dealer or insurer will encounter solvency or liquidity problems or fail to meet capital adequacy requirements within a deadline set by FINMA. These are intended to allow financial institutions at risk to maintain activities that require authorisation or continue to provide certain services. 

Suspension of voting rights and ban on further purchases under stock exchange law

FINMA has the power to enforce the disclosure obligation under Article 20 SESTA by suspending the voting rights of individuals suspected of violating it and temporarily banning them from increasing their stake in the company. FINMA must lift the measure or measures imposed once the requirement is met or the suspicion is proven to be incorrect. 

Features of precautionary measures

  • Precautionary measures where they serve to secure evidence and / or assets or to avert an immediate threat in any other way, are imposed on an interlocutory basis, i.e. without granting a hearing to those involved.
  • FINMA can impose precautionary measures for the duration of proceedings and also after issuing a final ruling until the latter becomes legally binding.
  • As a rule, precautionary measures are by their very nature enforceable immediately; FINMA does not allow appeals to suspend their effect.
  • Evidence requirements are less strict where precautionary measures are concerned. Sufficient, credible indications that the interests FINMA is tasked with protecting are at risk are normally enough to justify them.
  • Precautionary measures may not be imposed on a long-term basis. They are only justified while necessary to avert a threat or while evidence is gathered. FINMA must therefore decide on the case in hand within a reasonable time frame and either lift the precautionary measures or replace them with definitive measures.