The Securities Litigation Review
i Sources of law
In Switzerland, there is no single body of law setting out the law of securities. The substantive law regulating securities is codified in the Swiss Code of Obligations (CO).2 Three sections of the CO are of special relevance when dealing with securities: the provisions on companies limited by shares in Article 620 et seq. CO, dealing with equity securities; the provisions regarding negotiable securities (which may include both equity and debt) in Article 965 et seq. CO; and the provisions regarding debt securities issued as bonds in Article 1156 et seq. CO. The procedure for civil litigation is set out in the Swiss Civil Procedure Code (CPC).3 In cases involving foreign parties, international private law comes into play, especially the Lugano Convention (LC)4 (applicable in cases involving parties from most European countries) and the Federal Statute on Private International Law (PIL)5 (applicable in cases involving parties from non-European countries).
Public securities law and public enforcement are governed by the Federal Act on Financial Markets Infrastructures and Market Conduct in Securities and Derivatives Trading (FMIA)6 and - for securities that are traded on the main Swiss stock exchange, SIX Swiss Exchange Ltd - the Listing Rules and implementing provisions of the SIX Swiss Exchange.7 The Financial Market Supervision Act (FINMASA)8 establishes the organisation and sets out the supervisory instruments of the Swiss Financial Market Supervisory Authority (FINMA), which is the Swiss authority for the supervision of the financial markets. Concerning criminal liability in general, the Swiss Criminal Code (SCC)9 and the Swiss Criminal Procedural Code (SCP)10 are of relevance.
ii Regulatory authorities
There is no regulatory authority entrusted with the general supervision of securities transactions in Switzerland. Indeed, in the absence of any criminal act, offerings of securities, whether public offerings or private placements, are still not subject to any regulatory oversight.
FINMA has certain limited power in connection with the enforcement of the requirements under the FMIA, in particular relating to disclosure of major shareholdings, insider trading and market abuse. SIX Exchange Regulation, an independent body of the main Swiss stock exchange, assumes a certain supervisory and enforcement role as a private organisation against its members. In the securities context, SIX Exchange Regulation may act in the event of certain failures to disclose price-sensitive information or of making false and misleading statements to the capital market (the ad hoc rule).
The Federal Department of Finance has the primary responsibility for the prosecution of failures to notify qualified shareholdings. Prosecution authorities are responsible for criminal proceedings under the FMIA and the SCC (see Section III, infra).
iii Common security claims
Very few actions for breaches of securities laws are ever brought to court in Switzerland. Lawsuits brought by investors against issuers or...
To continue readingREQUEST YOUR TRIAL