Measures against unauthorised financial market participants

Individuals operating in the financial market without the requisite authorisation are in violation of supervisory law. FINMA takes appropriate measures against unauthorised financial market participants in order to restore compliance with the law and ensure the market’s stability and integrity and, in particular, to protect investors. Unauthorised companies are normally liquidated. Where individuals are concerned, FINMA can issue a cease and desist order, combine it with the threat of a penalty and publish it.

Sanctions under administrative law

In cases of unauthorised activity, the Financial Market Supervision Act (FINMASA) empowers FINMA to impose various sanctions under administrative law, the most important being the enforcement instruments set out in Article 29 ff. FINMASA. The broad spectrum of measures available ranges from issuing declaratory rulings and specific orders under Article 31 FINMASA to restore compliance with the law up to liquidation. FINMA generally bans individuals involved as ultimate management or in any other capacity from conducting any unauthorised financial market activity under any name, either by themselves or through third parties, or advertising such activity in any form (cease and desist order). Depending on the severity of the violation, FINMA can publish the final ruling or parts of it, including the personal details of those involved.

FINMA must abide by the principles of constitutional and administrative law. The principle of proportionality means that it must select the most lenient appropriate enforcement measure from those at its disposal. It is the established practice of the courts to allow FINMA, as a specialist authority, a great deal of discretion in its choice of measures.

Precautionary measures

Where delay entails risks, FINMA orders the imposition of immediate precautionary measures. It sometimes does so on an interlocutory basis, i.e. without granting the legal right to be heard hearing to those concerned before. A typical example of precautionary measures is the appointment of an investigating agent.

FINMA enforcement policy

Updated: 25.09.2014 Size: 0.31  MB
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