The topic of retrocessions has been in the focus of banks, asset managers, clients, pension funds, lawyers and the media ever since a verdict was given by the Federal Supreme Court in March 2006 (BGE 132 II 460). In their decision, the Federal Supreme Court decided that the retrocessions received by asset managers from banks belong to the clients of the respective asset management mandates. The topic was further intensified by another judgment of the Federal Supreme Court of October 2012 (BGE 138 III 755) which extended the duty of restitution; not only asset managers are bound to restitute the retrocessions received from banks, but also the banks have to pass on hidden commissions they receive from product providers to clients with discretionary mandates.

By Thomas Müller (Reference: CapLaw-2015-61)

On 5 June 2015, the European Commission recognised the Swiss (re)insurance supervision system as being fully equivalent with the Solvency II Directive. The European Commission recognised in particular the equivalence of the Swiss system in three areas, such as reinsurance, solvency calculation and insurance group supervision.

By Petra Ginter (Reference: CapLaw-2015-42)

P.R.I.M.E. Finance is an arbitral institution specialized in the settlement of financial disputes that was established in The Hague in 2012. As a relatively novel arbitral institution it is not only facing promising opportunities but also difficult challenges.

A hotly debated topic is P.R.I.M.E. Finance’s closed list of arbitrators from which the parties are obliged to choose. While the list includes specialists with expertise in finance and arbitration, it is nevertheless exclusive and may therefore lose attractiveness vis-à-vis other arbitral institutions. Another issue is the publication of awards by P.R.I.M.E. Finance. Even though the transparency of awards helps to build up a consistent body of law aiming at more legal certainty in the financial markets, parties may be unwilling to trade off the confidentiality advantage of arbitration.

Despite these challenges, P.R.I.M.E. Finance may have a positive market resonance. In September 2013, its model arbitration clause has been hardwired into the first Arbitration Guide of the International Swaps and Derivatives Association (ISDA), a market with a tremendous volume.

By Désirée Klingler (Reference: CapLaw-2015-43)

Pursuant to the Swiss Federal Supreme Court’s ruling 4A_138/2014 of 16 October 2014 (BGE 140 III 533), up-stream and cross-stream loans which are not at arm’s length block an intra-group lender’s freely distributable equity and limit dividend distributions in the amount of any such up-stream or cross-stream loan. In the same ruling, the Swiss Federal Supreme Court ended a controversy in legal doctrine by deciding that additional paid-in capital (Agio) is to be treated like general reserves and, hence, can be distributed as dividends.

By Marc Hanslin / Roland Lüthy (Reference: CapLaw-2015-30)

On December 12, 2014, the Swiss Parliament adopted the Federal Act for Implementing the Revised Financial Action Task Force (FATF) Recommendations. The Federal Act provides new and revised provisions in the field of anti-money laundering, criminal and corporate law. The revisions mainly focus on enhanced transparency on the ownership of legal persons, the clarification and extension of the definition of Politically Exposed Persons (PEP) and, most importantly, the extension of the scope of predicate offences for money laundering to include qualifi ed tax offences.

By Alexander Greter / Nicolas Bonassi (Reference: CapLaw-2015-31)

Over the past years, enforcement has become an increasingly important means for the Swiss Financial Market Supervisory Authority FINMA to achieve its supervisory goals. In line with its stipulation to make enforcement activities more visible, FINMA, in spring 2015, for the first time published a specific report summarising its enforcement activities in 2014. In the future, FINMA intends to publish an enforcement report once a year. This article provides an overview of the enforcement report.

By Philipp Candreia (Reference: CapLaw-2015-32)

Following a review of the consultation results on the draft Financial Services Act (FinSA) and the draft Financial Institutions Act (FinIA), the Swiss Federal Council decided that certain elements needed to be revised and the dispatch for submission to the Swiss Parliament be postponed until the end of 2015.

By René Bösch / Benjamin Leisinger (Reference: CapLaw-2015-33)

Never before has an opinion of a European Advocate General had such a severe impact on Switzerland as the one published on the request for preliminary ruling in the so-called OMT case, a government bond-buying program announced by the ECB in 2012. Only one day after the Advocate General basically rejected the legal concerns of the German Constitutional Court that had asked for preliminary ruling, the Swiss National Bank withdrew its previously made promise concerning the maximum exchange rate of the Swiss Franc vis-à-vis the Euro. The European Court of Justice has now ruled in the same direction as the Advocate General had recommended in its opinion.

by Peter Sester (Reference: CapLaw-2015-34)

The two year transitional period applicable to the rules for the marketing of non-Swiss funds to unregulated qualified investors in Switzerland under the amended Collective Investment Schemes Act (CISA) ended on 28 February 2015. As from 1 March 2015, a Swiss representative and a Swiss paying agent must be appointed and Swiss law governed distribution agreements between the Swiss representative and the entities distributing the relevant non-Swiss fund in Switzerland must be in place, prior to marketing such funds to unregulated qualified investors in Switzerland.

By Patrick Schleiffer/Michael Kremer (Reference: CapLaw-2015-17)

The partial revision of the Swiss Insurance Supervision Ordinance (ISO) initiated by the Federal Finance Department (FFD) in 2014 will enter into force on 1 July 2015. The revision focuses primarily on the themes of solvency, qualitative risk management and disclosure. This article shall give an overview on the various amendments, and in particular on the revised provisions on the eligibility of hybrid instruments as regulatory capital.

By Petra Ginter (Reference: CapLaw-2015-18)