The Swiss Financial Market Supervisory Authority FINMA has concluded enforcement proceedings against two institutions and one individual for serious breaches of the rules of conduct governing the provision of financial services under the FinSA. To restore compliance with the law and protect investors, FINMA ordered various measures. It withdrew Swiss Fund Management AG in liquidation’s licence to manage funds. An application by BZ Berater Zentrum AG for authorisation as an independent portfolio manager was rejected. In addition, FINMA is confiscating millions in illegally generated profits and imposing a multi-year industry ban on one of the individuals responsible.
In the course of its supervisory activities, FINMA came across evidence that the funds managed by Swiss Fund Management AG in liquidation (SFM) and the asset management clients of BZ Berater Zentrum AG (BZ) held a large amount of illiquid bonds, which were primarily destined for financing overseas real estate development projects. Due to various interdependencies, there were indications of conflicts of interest. Following an on-site inspection at SFM, FINMA initiated enforcement proceedings against SFM and BZ in 2024. FINMA appointed an investigating agent and, during the investigation, imposed precautionary measures allowing it to support and monitor BZ’s business activities. FINMA concluded the proceedings on 1 May 2026 and ordered various measures.
Serious breaches of the rules of conduct
The investigation revealed that the bond issuers are all affiliated with one another. FINMA concludes that SFM and BZ have, amongst other things, seriously breached their duty to avoid conflicts of interest and the resulting detriment to clients. During the period under review, BZ held around 2,000 asset management mandates. Investor funds amounting to around CHF 200 million were invested, either directly or indirectly via the funds, in illiquid bonds of dubious value. The affiliated, non-operational issuers immediately transferred the bond proceeds – contrary to their advertising claims – on an unsecured basis to real estate investment companies controlled by the individuals involved.
The bond proceeds were used primarily to finance real estate development projects. Part of the bond proceeds were also used to acquire shareholdings and to finance the operational activities of other companies, including SFM and BZ. In FINMA’s view, investors were not adequately informed about these inherent conflicts of interest. The value of these bonds depends on the success or failure of the real estate development projects and is therefore currently uncertain. Due to the close links between the parties involved, they were able to use the bond proceeds largely without restriction and, in some cases, also arranged personal loans amounting to tens of millions.
As a result, investor funds were invested in a non-diversified manner, driven by financial self-interest, in the companies’ own products, which were inconsistent with the investors’ risk profiles and the objective of pension provision, and were therefore unsuitable for the investors. The interests of investors were thereby systematically subordinated to the self-serving interests of SFM and BZ. The conduct of the two companies constitutes a serious breach of their due diligence obligations in the form of the appropriateness and suitability checks required under the FinSA.
FINMA orders various measures
FINMA concluded the enforcement proceedings by ordering various measures to protect investors and safeguard the reputation of the financial market. It has revoked SFM in liquidation’s licence as a manager of collective assets (funds) and appointed the investigating agent Grant Thornton AG to act as liquidator. Furthermore, BZ’s application for authorisation as an independent portfolio manager was rejected, and it therefore had to cease its asset management activities within 30 days of notification of the ruling. FINMA has imposed a multi-year industry ban on one of the individuals responsible. In addition, FINMA is confiscating over CHF 3 million in illegally generated commission from BZ and an individual involved for the placement of illiquid bonds, which has accrued since the rules of conduct for financial service providers came into force.
The ruling was not contested by the parties within the period for filing an appeal and has entered into legal effect. Before the ruling became final, FINMA upheld the precautionary measures previously ordered. However, FINMA did not prohibit any repayments or interest payments on existing bond investments. These may continue to take place for the benefit of investors.
To date, around 150 people have initiated mediation proceedings against BZ. The relevant ombudsman’s office, OFS Ombud Finance Switzerland, has decided to commence mediation with these individuals now that FINMA’s enforcement proceedings have been concluded.
