The Securities Litigation Review: Switzerland


i Sources of law

In light of the international developments in the area of financial market regulation, Switzerland has completely revised its financial market regulation in recent years.2 On 15 June 2018, Swiss parliament adopted the Financial Services Act (FinSA) and the Financial Institutions Act (FinIA). This legal framework is a response to the shortcomings of the former legal situation. FinSA aims to protect investors from improper behaviour by financial service providers and to strengthen investor confidence in a stable and functioning market.3

As of 1 January 2020, FinSA and FinIA entered into force with their implementing regulations.4

The new regulations, inter alia, govern the law on prospectus liability. Previously, the prospectus duty for financial products was dispersed throughout various laws and regulations, which is why it lacked consistency. Owing to the enormous size of most of the prospectuses, an assessment of the products was difficult, and (other than in the area of collective investment schemes) concise product documentation that is easy to understand was rarely available. The options for investors to assert their rights were severely restricted and entailed high cost risks.

Now, the former, very brief provisions of the Swiss Code of Obligations (CO) have been replaced by a uniform set of rules set out in FinSA.

FinSA is based largely on EU law (MiFID, Prospectus Directive, PRIPs project) with adjustments made to reflect specific Swiss circumstances. It encompasses cross-sector rules for offering financial services and distributing financial instruments and provides clients with the necessary tools to assert their claims. FinIA essentially harmonises the authorisation rules for financial service providers (other than banks and insurance companies) by introducing a prudential supervision of managers of individual client assets, managers of the assets of occupational benefits schemes and trustees.

In addition to the new regulations, civil law continues to be an important legal source. The following provisions are particularly relevant: Article 41 CO as the basic torts provision, the provisions on agency in Articles 394 et seq. CO and finally the provisions with regard to companies limited by shares in Article 620 et seq. CO as well as concerning negotiable securities in Article 965 et seq. CO.

Civil domestic litigation is regulated in the Swiss Civil Procedure Code (CPC) and the Federal Statute concerning the Federal Supreme Court (SCS). With regard to international litigation, in particular, the International Private Law Act (PILA), the Lugano Convention (LC) and numerous international treaties are relevant.

In the field of public law, trading in securities is governed by the Federal Act on Financial Markets Infrastructures and Market Conduct in Securities and Derivatives Trading (FMIA). Further, the Collective Investment Schemes Act (CISA) may also be applicable. The organisation of the Swiss Financial Market Supervisory Authority (FINMA) and its supervisory instruments are set out in the Financial Market Supervision Act (FINMASA).

The administrative procedure is regulated in the Administrative Procedure Act. When it comes to the prosecution of criminal offences under the FMIA, the Swiss Criminal Procedural Code (SCP) and the Federal Act on the Organisation of the Criminal Prosecution Authorities regulate the criminal procedure and the competent authorities.

ii Regulatory authorities

FINMA is given certain general powers and tools to enforce the provisions of the Swiss financial market laws5 and additional specific instruments, such as to proceed against the failure to disclose shareholdings, insider trading and market manipulation.6 In this regard, the supervisory authority checks whether the rules of conduct of FinSA are observed with respect to supervised financial service providers. It should be noted that FinSA has introduced a comprehensive and standardised prospectus obligation for securities.7 Under the new regime, all prospectuses will be subject to an approval process. In particular, they must be submitted to a new reviewing body prior to their publication, which has been approved by FINMA.8 The board will review the prospectus for completeness, coherence and comprehensibility.9

While FINMA is entitled to take administrative measures under FINMASA, the Federal Department of Finance is generally responsible for prosecuting violations of the criminal provisions of the financial market acts, unless provided otherwise.10 The Attorney General of Switzerland is entrusted with the prosecution of market manipulation and insider trading.11

iii Common securities claims

Lawsuits for breaches of securities law are rare in Switzerland. Consequently, there are only a few precedents available. There may be several reasons for there being so little case law, including:

  1. the cost of litigation is high, with a prohibition on contingency fees and a loser-pays rule;
  2. there are no instruments for mass claims; and
  3. the burden of proof often lies on the investor, leading to a high litigation risk and a rather litigation-averse attitude.

A preliminary draft amendment to the CPC provided for provisions to remedy these shortcomings. Yet, due to disagreement in the advisory procedure, the Swiss Federal Council decided to treat the issue of collective redress in a separate motion.12 There is, however, a new feature in the area of dispute resolution: any dispute between a client and its financial service provider may be settled by an ombudsman in mediation proceedings.13 This provision aims to implement a non-bureaucratic, fair, quick and impartial conflict resolution.14

As there was no public supervision of securities offerings, the public enforcement of securities claims so far mainly related to matters such as insider trading,15 market disruption,16 reporting duties,17 the duty to make an offer,18 and wrong or missing information in a prospectus.19 It remains to be seen whether the new regulatory regime will result in additional public enforcement actions.

Private enforcement

i Forms of action

Prospectus liability

FinSA replaces the previous prospectus law of the CO (Article 652a and Article 752 as well as Article 1156 CO). The basic provision for actions regarding prospectus liability is now regulated in Article 69 FinSA, which reads as follows (informal translation):

1 Any person who fails to exercise due care and thereby furnishes information that is inaccurate, misleading or in violation of statutory requirements in prospectuses, key information documents or similar communications is liable to the acquirer of a financial instrument for the resultant losses.
2 With regard to information in summaries, liability is limited to cases where such information is misleading, inaccurate or inconsistent when read together with the other parts of the prospectus.
3 With regard to false or misleading information on main prospects, liability is limited to cases where such information was provided or distributed against better knowledge or without reference to the uncertainty regarding future developments.
Scope of application

With regard to liability, the following provisions are relevant for the interpretation of Article 69 FinSA: Article 3 FinSA for the definition of financial instruments, Article 35 FinSA for the duty to publish a prospectus, Articles 36 to 39 FinSA for exemptions of this duty and Article 40 FinSA for the necessary content of a prospectus.

Generally, Article 69 FinSA largely takes over the regulatory content of the former prospectus liability under Article 752 CO.20 Accordingly, the subject of liability concerns standardised information, which does not meet the legal requirements. Yet there are subtle differences between the former and the new liability. Article 69 FinSA has a wider scope of application, because liability is not related to a specific product but worded neutrally. Therefore, the subject of liability now not only includes prospectuses21 but also key information documents22 or similar communications intended for the use of investors.23 The three main client segments are private clients, professional clients and institutional clients. In particular, the prospectus requirements concerning private clients have been extended. Now, as a rule, a producer must first produce a key information document, where it offers a financial instrument to retail clients.24 This brief documentation is intended to enable private clients to make informed investment decisions and compare different financial instruments.25 On the other hand, the law also provides for various exemptions, depending on the offer itself (e.g., its addressees, the number of addressees, value, etc.) and the type of securities offered.26 Among others, offers addressed to professional clients would not require a prospectus.

Further, FinSA requires the prior publication of a prospectus in two cases: when a public offer to purchase securities is made (issue) and when securities are admitted to trading on a stock exchange (listing).27 Subject to expressly regulated exceptions, FinSA requires a prospectus for all equity and debt securities, including derivatives and structured products.28 This product-neutral framework is based on the European Prospectus Directive (2003/71/EG).29 It should also be noted that liability extends to documents that refer to the prospectus in accordance with Article 44 FinSA.30

Additionally, the liability according to Article 69 FinSA has adopted the case law on Article 752 CO. Previously, the Swiss Federal Court had extended Article 752 CO contrary to its wording to buyers on the secondary market.31 This extension equally applies under the new legal regime as per Article 69 FinSA.32 Finally, liability for information in the summary shall be assumed only if it is misleading, inaccurate or inconsistent when read together with the other parts of the prospectus.33


Damages are calculated based on the 'theory of difference', comparing the aggrieved party's financial situation with the hypothetical financial situation if the harming event had not occurred.34 In the frame of prospectus liability, damages usually occur only after the public learns of the inadequacy of the information provided in the prospectus.35 They are calculated as the difference between the actual paid issue price based on the flawed prospectus and the actual price after the public learns about its inadequacy, factoring out general market developments.36

Violation of duty

Liability under Article 69 FinSA arises if information is inaccurate (i.e., not objectively correct), misleading (i.e., conceals or omits relevant facts) or in breach of a statutory duty (i.e., if it does not comply with statutory prerequisites,37 in particular if it is incomplete38). The statutory duties are defined in Article 40 FinSA. According to this provision, the prospectus shall contain the essential information for the investor's decision on the issuer, the guarantor or other security providers (if any), the securities and the offer. Compared to the previous regulation, the scope of the statutory duties has been expanded considerably. Accordingly, the prospectus must contain the associated risks for investors with regard to the securities and the offer. The detailed requirements for the offering of securities and other financial instruments are governed by FINSO.39

Under FinSA, future (i.e., forward-looking) information may also cause liability, yet the consequences are limited to cases where information was provided against better knowledge or without referring to the uncertainty of future developments.40 With this regulation FinSA follows the US securities law, which has a similar regulation with the so-called bespeaks caution doctrine.41

Apart from the above, liability may be based on tort in accordance with Article 41 CO.42 Liability in tort requires violation of a provision protecting the concerned financial asset; in particular, Article 152 Criminal Code regarding false statements about commercial businesses. Remarkably, exploitation of insider information43 or market manipulation44 are said to serve the aim of equal treatment of all investors and the protection of the market's efficiency and may, therefore, not serve as basis for a tort claim.45 With FinSA, however, new criminal provisions have entered into force, the violation of which can also be the basis for tortious liability under Article 41 CO. In this regard, Article 89 lit. a FinSA states that providing false information or withholding material facts can be punished by up to 100,000 Swiss francs. Further, Article 90 FinSA punishes the violation of the prospectus regulations and key information documents with a fine of up to 500,000 Swiss francs. Generally, since FinSA is public law in nature, it remains to be seen which regulations qualify as protective provisions and thus may trigger liability under Article 41 CO.46

Another basis for a damages claim may be breach of trust.47 The requirement is that a special relationship exists between the investor and the liable person, creating legitimate expectations of the investor and disloyal disappointment of such expectations.48 In a landmark decision, the Federal Supreme Court held that an expert may be liable to a third party based on created expectations even if there is only an indirect connection – for example, if the customer or client passes on the expert report to a third party and the expert could have anticipated the dissemination.49


For causation, there is a distinction between actual cause and legally proximate cause.50 In the context of prospectus liability, causation reflects two aspects. On one hand, the violation of duty must have caused the claimed damages (actual cause). On the other hand, there is the question whether the inadequacy in the prospectus actually influenced the decision to acquire the securities for the respective price (legally proximate cause).51

With regard to the latter, the legislator refrained from including a presumption between incorrect prospectus content and purchase decision.52 The fraud on the market doctrine is, therefore, still not implemented. Accordingly, the investor must prove reliance on inadequate information provided by the prospectus, and that he or she would not have purchased the securities, or would have done so at a lower price with adequate information.53 Since it is usually not possible to strictly prove causation, the Swiss Supreme Court ruled that a lower standard of proof shall apply for causation, namely preponderant probability.54 This also applies under the new legal framework.55

In cases where liability is based on the failure to publish a prospectus or to disclose certain information, the investor must demonstrate that there was a duty to act. There is causation if compliance would have prevented the loss or if it influenced the decision to acquire the securities.56


According to general civil law standards, a party may only become liable when at fault. Fault includes both intentional and negligent actions. The scale that is applied to fault is an objective one as compared with the skills and knowledge of an average reasonable person acting in the market.

Article 69 FinSA does not explicitly stipulate an intentional or negligent liability. The provision instead refers to the failure to exercise due care. It is not clear whether the legislator intended to establish a causal liability (strict liability).57 In the case of strict liability, the fault of the person who caused the damage does not need to be established.58 In any case, the differences from the previous law will still have to be determined by the courts.59

Standing to sue and to be sued

In accordance with Article 69 FinSA, anyone who purchases financial instruments can act as claimant. This includes not only the first buyer, but also any later acquirer as far as the information in the prospectus was causal for the decision to acquire the financial instruments.60 The body of creditors61 and the company itself are not entitled to sue.62

On the other hand, liability extends to a person who furnishes the inaccurate information. Thus, only the issuer of information can be held liable. This was controversial over a fairly long period of time. The Swiss parliament had discussed whether, in addition to the issuer, anyone who contributed to the information should in fact be liable. In line with Article 752 CO, the previous regulation, this would have included the distributor of the prospectus, especially consortium banks and financial institutions.63 Following lengthy discussions, the Swiss parliament rejected extensive liability, arguing that the distributor has no possibility to influence the contents of the instruments and documents.64

Burden of proof

The revision of Article 69 FinSA raised a debate on the applicable burden of proof. To improve the position of investors, the preliminary draft provided for a reversal of the burden of proof.65 Accordingly, any person who contributed to the prospectus would have to prove that he or she was not at fault. In practice, this version would have required proving a negative fact, which poses important difficulties.66 The Swiss parliament finally insisted on the general allocation of the burden of proof in civil law. As a consequence, proof of the damage, the breach of duty (inaccurate, misleading or insufficient information in the prospectus) and the adequate causal link between the damage and the breach of duty must be proved by the injured party.67

Statute of limitations

The prospectus liability pursuant to Article 69 FinSA is of private law nature.68 Absent any provision contrary to FinSA, the claim is therefore subject to the 10-year limitation period pursuant to Article 127 CO. As opposed to the former statute of limitations of five years under Article 760 CO, the limitation period has thus been doubled. In the event that the claim derives from a criminal action for which the criminal law stipulates a longer statute of limitations, the latter also applies to the civil claim.

Breach of simple agency agreement

Investors often seek advice before buying financial instruments or delegate portfolio management. Investors may bring actions for damages claiming that the portfolio management69 or the investment advice was not diligent or was not in the investor's interest. The underlying legal relationship is subject to the provisions of simple agency pursuant to Article 394 et seq. CO. Thus, claims against asset managers, investment advisers, banks and securities firms will often be based on an alleged breach of simple agency agreements.


Loss is calculated by comparing the investor's actual financial position with the position as it would have been if the required care and loyalty had been applied and the simple agency agreement had, hence, been fulfilled properly. The amount that may be claimed consists of both the reduction of assets due to improper investment and loss of profit.70

Violation of duty

Liability may arise based on Article 398 Paragraph 2 in connection with Article 97 Paragraph 1 CO:

  1. violation of the duty of care;
  2. breach of the obligation of loyalty; or
  3. failure to comply with investor's instruction.71

In the field of asset management and investment advice, the duty of care is specified, inter alia, in the Portfolio Management Guidelines72 issued by the Swiss Bankers Association. Although these guidelines constitute self-regulation (rather than statute) and target Swiss banks, they may be considered as general standards of care with regard to securities dealers.73

One of the common subjects of dispute is whether the violation of duty was ratified: for example, if the investor never objected to the custody account statements that were duly delivered.74

The interpretation of the civil liability provisions is highly likely to be affected by FinSA. Although the relationship between civil liability and the public regulatory law is not entirely clear, there are indications that FinSA will have an impact on private law. This follows from the fact that the legislator apparently opted for the so-called concept of radiation (Ausstrahlungswirkung) between the two areas of law. Accordingly, regulatory and private law shall complement each other indirectly, mutually and 'where necessary'. This interpretation could also mean that civil courts will consider supervisory orders such as FINMA circulars, which specify the obligations of financial service providers, when interpreting the private law provisions of FinSA.75 In particular, FinSA provides for various duties of care, protection of interests and loyalty (namely duties of information, appropriateness testing and documentation), which are to be regarded as a concretisation of Article 398 CO.76


Causation under the simple agency agreement requires both actual cause and legal proximate cause.77 The investor will have to show that the loss would not have occurred or would be lower if the financial intermediary had acted in compliance with his or her contractual duties. Under simple agency law, preponderant probability rather than strict proof is sufficient to establish legal proximate cause.78


Any degree of fault is sufficient for a claim under an agency agreement. It is common practice that financial intermediaries exclude liability for slight negligence in the agreement.79

Standing to sue and to be sued

Any investor who is a party to a simple agency agreement is entitled to raise damages claims based on breach of contract. On the other hand, any financial intermediary who is a party of the respective simple agency agreement may be sued.

Burden of proof

An investor claiming damages owing to breach of a simple agency agreement must prove his or her loss, a violation of duty and causation. Fault is presumed, and it is up to the financial intermediary to exonerate him or herself.

Statute of limitations

Claims for damages become time-barred at 10 years80 after the loss occurred.81

Provision of documents

Under FinSA, clients have the right to claim a copy of all the documents and records that the financial service providers keep concerning the specific client and the client relationship. Articles 15 and 16 FinSA and Articles 18 and 19 FinSO determine the scope and the requirements regarding the records that the service provider has to keep. As an example, service providers shall document the financial services agreed with clients82 and shall, upon request of the client, render account of the composition, valuation and development of the portfolio as well as the costs associated with the financial services.83

Articles 72 and 73 FinSA and Article 97 FinSO govern the formal and material aspects of the provision of documents. Upon request, clients must receive a copy of their file and all other documents that the financial service provider prepared within the context of their business relationship.84 The client must submit the request in writing or in another form demonstrable via text.85 The service provider is required to provide the copy within 30 days free of charge.86 By means of FinSA, the client can enforce this right in court if the service provider does not comply with the request.87 Further, the court may consider a refusal to provide the documents in later court proceedings to the disadvantage of the service provider.88

ii Procedure

With the coming into force of FinSA, investors may seek to solve their disputes by an ombudsman or in domestic proceedings. Under Articles 74 et seq. FinSA, disputes between the client and the financial service provider can be settled by a so-called ombudsman in mediation proceedings. This gives both parties the opportunity to call on an independent, state-recognized institution with specific expertise without limiting their procedural rights.89 The purpose of the simplified procedure is to protect clients from costly and potentially risky legal proceedings.90 The proceedings are confidential, so the statements made by the parties and the correspondence between the parties and the ombudsman may not be used in subsequent civil proceedings.91 A request for mediation with an ombudsman does not exclude a civil lawsuit, but the plaintiff can unilaterally waive the conciliation procedure according to Article 197 CPC after the ombudsman proceedings have been conducted.92

In domestic proceedings, a claimant may file an action for prospectus liability either with the court at the respondent's domicile or registered office, or at the court at the office of the company issuing the securities.93 In a canton with a commercial court,94 the commercial court may be competent.95

In most cases, court proceedings are preceded by mandatory conciliation proceedings,96 unless a commercial court has jurisdiction. In addition, the claimant may unilaterally waive conciliation proceedings if the other party resides abroad.97 In the event the respondent agrees and the amount in dispute is above 100,000 Swiss francs, the parties may waive the proceedings at the first instance and initiate proceedings directly at the cantonal appellate court.98

Decisions of the first instance may be appealed to the cantonal appellate courts,99 followed by appeal to the Swiss Federal Court,100 whose review, however, is limited to legal issues.101

Swiss law does not provide for class actions. The remedies for collective enforcement are very limited. With regard to damages claims, the only option is that claimants with similar or identical claims may together file an action for damages102 or the courts may join several proceedings in one proceeding.103 A group action according to Article 89 CPC is directed at protection of personality rights and enables the group to request only prohibition of a violation, the ending of an ongoing violation or the establishment of a violation, but no claim for damages.

Legal costs are usually imposed on the unsuccessful party.104 They include court costs and the reimbursement of attorney's fees. Both are determined based on cantonal tariffs that reflect the amount in dispute and the complexity.105 Contingency fee arrangements are prohibited.

iii Settlements

Settlements may be concluded at any time, out of court or in court. In-court settlements qualify as surrogate court decisions106 that are enforceable and have res judicata effect.107

Claims in the context of corporate liability108 often include multiple persons who are jointly and severally liable (Article 759 CO), for which reason settlements require particular attention. It is strongly debated whether a settlement between only some of the involved persons but not all would have erga omnes effect, meaning that it has effect beyond the parties to the settlement. Thus, even if a settlement is reached, as long as not all potentially liable persons agree to the settlement, the risk of recourse claims exists and can hardly be excluded.109

iv Damages and remedies

See Section II.i at 'Loss'.

Public enforcement

i Forms of action

The key provisions with respect to public enforcement of securities transactions relate to insider trading, market manipulation, reporting duties, the duty to make a public offer and the duty to provide a prospectus for collective investment schemes. In the event of any breach, administrative measures and criminal sanctions may be imposed.

Insider trading

Article 142 FMIA provides that any person who knows or should know that information constituting insider information or who has a recommendation that he or she knows or should know is based on insider information behaves inadmissibly when he or she:

  1. exploits it to acquire or dispose of securities listed in Switzerland or to use financial instruments derived from such securities;
  2. discloses it to another; or
  3. exploits such information to make a recommendation to another person to acquire or dispose of securities listed in Switzerland or to use financial instruments derived from such securities.

A corresponding, but slightly more restrictive, criminal provision is set forth in Article 154 FMIA.

Market manipulation

Article 143 FMIA provides that a person behaves inadmissibly when he or she publicly disseminates information that he or she knows or should know gives false or misleading signals regarding the supply, demand or price of securities listed in Switzerland, or carries out transactions, purchase or sale orders that he or she knows or should know give false or misleading signals regarding the supply, demand or price of securities admitted on a trading venue in Switzerland. The FMIA also sets forth a criminal provision on market manipulation with a narrower scope.110

Reporting duty

Anyone who directly or indirectly or acting in concert with third parties acquires or disposes of shares or purchase or sale rights relating to shares of a company with a registered office in Switzerland whose equity securities are listed in whole or in part in Switzerland, or of a company with a registered office abroad whose equity securities are mainly listed in whole or in part in Switzerland, and thereby reaches, falls below or exceeds the thresholds of 3, 5, 10, 15, 20, 25, 33⅓, 50 or 66⅔ per cent of the voting rights, whether exercisable or not, must notify this to the company and to the stock exchanges on which the equity securities are listed.111

Duty to make an offer

Anyone who directly, indirectly or acting in concert with third parties acquires equity securities which, added to the equity securities already owned, exceed the threshold of 33⅓ per cent of the voting rights of a target company, whether exercisable or not, must make an offer to acquire all of the listed equity securities of the company. Target companies may raise this threshold to 49 per cent of voting rights in their articles of incorporation.112

Non-licensed banking activity

Professional acceptance of public funds is reserved to banks licensed by FINMA,113 with a specific exclusion for bond issues. However, if the prospectus does not provide for all required information, the issuer runs the risk of FINMA finding non-licensed banking activity and sanctioning the issuer.

ii Procedure

FINMA may initiate administrative procedures to sanction the above duties. The proceedings are governed by the Federal Act on Administrative Procedures of 20 December 1968. In contrast, the Federal Department of Finance may initiate criminal procedures and impose criminal sanctions in the event that criminal provisions of the FMIA are violated,114 save that the Attorney General of Switzerland is responsible for prosecuting certain offences, such as the criminal offence of insider trading and market manipulation.115 The Federal Act on Administrative Criminal Law of 22 March 1974 (ACL) applies to procedures conducted by the Federal Department of Finance while the SCP applies to procedures conducted by the Attorney General of Switzerland.116

If the Federal Department of Finance is of the view that the requirements for a custodial sentence or a custodial measure are met, the offence is subject to federal jurisdiction. In such a case, the Federal Department of Finance will refer the files to the office of the Attorney General of Switzerland for proceedings before the Federal Criminal Court.117

iii Settlements


Swiss law does not provide for any specific settlement procedures with FINMA. However, in practice, before opening a formal procedure pursuant to Article 30 FINMASA, FINMA initiates an informal preliminary investigation and when concluded makes an informal proposal to the person concerned on how the matter can be settled without the need (and risks) of a formal procedure. Typically, this applies in cases where no major regulations have been breached and often results in the resignation of the person in question from any managerial functions in the financial industry for a number of years.

Criminal authorities and Federal Department of Finance

There is only limited room for settlements in criminal investigations. Articles 52–54 of the Criminal Act provide for possibilities to refrain from prosecution in exceptional circumstances. In cases where financial loss was caused, and the offender made reparation for the injury or made every reasonable effort to right the wrong he or she has caused, the criminal authorities may in particular refrain from prosecution if the requirements for a suspended sentence (i.e., custodial sentence of no more than two years) are fulfilled and if the interests of the general public and of the persons harmed in prosecution are negligible.118 These provisions apply, by reference, also to the ACL.

iv Sentencing and liability

Administrative sanctions

FINMA is given supervisory tools under Article 29 et seq. FINMASA. Among others, FINMA may require information, restore compliance with the law, issue a declaratory ruling, prohibit a person from practising a profession, publish a ruling, confiscate any profit or revoke a licence, withdraw a recognition and cancel a registration.

If the duty to report shareholdings is violated, insider information is misused or the market manipulated, FINMA may issue a declaratory ruling, publish the supervisory ruling or confiscate any profit.119

If shareholdings are not reported, FINMA may, until the duty has been complied with, suspend voting and associated rights and prohibit the person concerned from acquiring further shares or purchase or sale rights relating to shares of the company, be it directly, indirectly or acting in concert with third parties.120

Criminal penalties

A criminal misuse of insider information or market manipulation may result in a penalty of up to 810,000 Swiss francs or imprisonment of up to three years.121 If the profit exceeds 1 million Swiss francs, imprisonment may be up to five years.

Penalties of up to 10 million Swiss francs may be imposed in cases where the duty to disclose shareholdings or the duty to make an offer are wilfully violated.122

Wilfully providing false information or withholding information in a prospectus with respect to collective investment schemes may result in a fine of up to 810,000 Swiss francs or imprisonment for up to three years.123

Articles 89–92 FinSA govern the criminal provisions of FinSA. Of particular relevance is the new criminal offence of Article 90 FinSA. It punishes the intentional violation of FinSA prospectus regulations and key information documents. Accordingly, a fine not exceeding 500,000 Swiss francs is imposed on any person who wilfully provides false information or withholds material facts in the prospectus or key information document. The offence also applies to any person who fails to publish the prospectus or the key information document by the beginning of the public offer at the latest. A reduced fine not exceeding 100,000 Swiss francs is imposed in particular on financial service providers who wilfully fail to make the key information document available prior to subscription or conclusion of the contract.124 It should be noted that the criminal provisions mentioned above do not apply to persons or entities that are subject to the supervision of FINMA, Article 92 FinSA. The rationale behind this exception is that FINMA supervised institutions are already liable under supervisory sanctions so that a threat of criminal offence is not necessary.125

Cooperation between FINMA and prosecution authorities

FINMA and the competent prosecution authority are obliged to exchange the information needed in connection with their collaboration and to fulfil their tasks. They must use the information received exclusively to fulfil their respective tasks and coordinate their investigations to the extent practicable and required.

Where FINMA obtains knowledge of common law felonies and misdemeanours or of offences against a financial market act, it must notify the competent prosecution authorities (Article 38 FINMASA).

Cross-border issues

i Private enforcement

Questions of jurisdiction and of applicable law for international cases are governed in Switzerland mainly by the PILA and the LC. Procedural matters, such as the taking of evidence or the service of judicial documents, may also be subject to international conventions.126

With regard to most European states, the LC governs jurisdiction. The LC does not provide a special provision for securities litigation. In principle, the claimant may choose to sue in the country where the defendant is domiciled,127 or in a special jurisdiction depending on the legal nature of the claim. If the claim concerns contractual matters,128 there is a special jurisdiction at the place of performance. In tort matters, a special jurisdiction at the place where the harmful event occurs or might occur may be relied on.129 Finally, there is a mandatory jurisdiction in favour of consumers.130

The PILA governs, inter alia, the jurisdiction with regard to disputes involving parties from states other than the contracting states of the LC. Similarly to the LC, the PILA provides for the option to sue at the place of the defendant's residence,131 at a special jurisdiction at the place of performance132 or at the place where the harmful action was executed or the injury resulted.133 Like the LC, the PILA also provides for mandatory consumer jurisdiction.134 Contrary to the LC, the PILA provides for additional special jurisdictions for corporate matters, such as prospectus liability; liability for administration, business management and liquidation; or auditors' liability. Thus, a claimant may also sue at the courts of the registered office of the concerned company,135 or at the place of issue of the securities.136

The applicable law also depends on the qualification of the legal nature of the respective claim. If the claim qualifies as contractual, in principle, the law of the state applies where the performance is rendered.137 If the investor is considered a consumer, the law at his or her usual place of residence will apply.138 If the action is based on tort and the parties have a common habitual residence, the law of that place applies.139 Otherwise, the law of the state where the harmful action was taken, or where the harmful event occurred, may apply.140

For liability related to corporate law, the law applying to the concerned company or the law at the place of issue of the securities may apply.141

ii Public enforcement

Cross-border issues may arise if a foreign entity violates a financial market act, such as FinSA, FMIA or CISA.

FinSA applies not only to domestic financial service providers but also to foreign financial service providers that offer financial services to clients in Switzerland. FMIA is applicable, among others, to securities listed in Switzerland, irrespective of the domicile of the parties involved. CISA is applicable, among others, to Swiss collective investment schemes and to foreign collective investment schemes that are offered in Switzerland.

In order to enforce the financial market acts against a foreign entity, FINMA may ask foreign financial market supervisory authorities for assistance142 or may itself carry out audits of supervised persons and entities abroad or have such audits carried out by audit agents.143

Year in review

By a judgment of 17 December 2018,144 the Swiss Federal Administrative Court decided an appeal against an enforcement decision by FINMA. A company engaged in asset management used funds received from investors for funding a capital increase. The Court confirmed the decision of FINMA to liquidate the company because of non-licensed public acceptance of funds, that is, non-licensed banking activity, and held that the original acceptance of funds qualified as a case of Article 752 CO. The decision underlines the importance of strict compliance of the prospectus with all legal requirements of a bond issue.

A topic of hot debate in recent years was whether initial coin offerings (ICOs) qualify as securities and under which conditions ICOs should be subject to securities regulations.145 In February 2018, FINMA published guidelines for enquiries regarding initial coin offers (ICOs).146 Accordingly, FINMA classifies the tokens issued as payment, utility and asset tokens. Asset tokens represent assets such as participations in real physical underlyings, companies or earnings streams, or an entitlement to dividends or interest payments. In terms of their economic function, the tokens are analogous to equities, bonds or derivatives. Thus, only asset tokens qualify as securities in the meaning of FinSA. Consequently, if a token qualifies as a security, it is also subject to the prospectus requirement according to FInSA.147 However, no related litigation has entailed to date.

Outlook and conclusions

The question arises whether the new financial market laws will create uniform competitive conditions for financial intermediaries and improve client protection. The regulatory picture is not significantly different, but has gained density and complexity.148 Although the controversial class action instruments and the reversal of the burden of proof have been removed from the bill, they will possibly reappear in the revision of the CPC. Nevertheless, FinSA will make it easier for clients to enforce their legal claims against the financial service provider, as private enforcement has been improved by the institution of the ombudsman's office.149 In addition, non-compliance by a bank with a duty of conduct, even if it is not sanctioned from a regulatory point of view, may be the basis for a claim under civil law. It is likely that the statutory right to the provision of documents will also reduce the power imbalance between the financial service provider and client. Transparency is also significantly enhanced by the obligation of the financial service provider to maintain communication to the client. Nevertheless, it remains to be seen whether these changes will actually result in more actions directed at enforcing clients' rights.


1 Jodok Wicki is the managing partner, Kaspar Landolt is a partner, Dominique Gemperli is a counsel and Roxana Sharifi is a legal practitioner at CMS von Erlach Poncet Ltd. Susanna Gut, a former associate at CMS von Erlach Poncet Ltd., contributed to the fourth edition of this chapter.

2 State Secreteriat for International (SIF), Financial market regulation, available at (retrieved on 30 April 2020).

3 Flavio Amadò, Die Verhaltensregeln des FIDLEG zwischen Aufsichts- und Zivilrecht, AJP 2018, 990, 992.

4 Financial Services Ordinance (FINSO) and Financial Institutions Ordinance (FinIO).

5 Article 29 et seq. FINMASA.

6 Article 144 et seq. FMIA.

7 Peter Nobel, Schweizerisches Finanzmarktrecht (Fourth Edition, Berne, 2019), p. 1230 No. 253.

8 Article 50 Paragraph 1 FinSA.

9 Articles 51 et seq. FinSA.

10 Article 50 Paragraph 1 FINMASA.

11 Article 156 Paragraph 1 FMIA.

12 Article 74 FinSA.

13 Swiss Federal Council, Media Release of 26 February 2020, available at (in German only) (retrieved on 30 April 2020).

14 Article 75 Paragraph 1 FinSA.

15 Article 154 FMIA.

16 Article 155 FMIA.

17 Article 151 FMIA.

18 Article 152 FMIA.

19 Article 148 Paragraph 1 lit. f CISA.

20 Dispatch on the Financial Services Act (FinSA) and the Financial Institutions Act (FinIA), 15.073, of 4 November 2015, p. 8992.

21 Article 35 FinSA.

22 Article 58 FinSA.

23 Article 68 FinSA.

24 Article 58 FinSA.

25 Nobel (footnote 7), p. 1160 No. 19.

26 Articles 38 et seq. FinSA.

27 Article 35 Paragraph 1 FinSA; Harald Bärtschi, Prinzipien des Finanzmarktrechts (Third Edition, Zurich, 2019), p. 217 No. 664.

28 Nobel (footnote 7), p. 1230 No. 250.

29 René Bösch, Das neue Schweizer Prospektrecht gemäss E-FIDLEG – eine Bestandesaufnahme und erste Würdigung, ZSR/RDS Volume 135 (2016) I Issue 2, p. 81.

30 Dispatch on FinSA and FinIA (footnote 20), p. 8993.

31 DFT 131 III 306, 308 E. 2.1.

32 Corinne Zellweger‐Gutknecht, FIDLEG, FINIG und FINFRAG - Gedanken zur Haftung für standardisierte Information gemäss den Vorentwürfen, in: Fuhrer, HAVE, Jahrbuch SGHVR 2014, p. 81.

33 Article 69 Paragraph 2 FinSA.

34 Ingeborg Schwenzer, Schweizerisches Obligationenrecht, Allgemeiner Teil (Seventh Edition, Berne, 2016), No. 14.03.

35 Thomas Reutter, 'IPO – Ablauf, Struktur, Haftung und Schadloshaltung' in Vol. 144, Kapitalmarkttransaktionen VIII (Reutter and Werlen (eds.), Zurich, Basle and Geneva; Europa Institut Zurich, 2014), p. 49 with further reference.

36 Rolf Watter, Basler Kommentar: Article 530-964 OR (Honsell, Vogt and Watter (eds.), Fifth Edition, Basle, 2016), Article 752 Nos. 22, 24.

37 As set out in Articles 652a, 653d–653f, 656a and 1156 CO and the Listing Rules of the SIX Swiss Exchange. With regard to open-ended collective investment schemes, Articles 75–77 CISA determine the prospectus duties.

38 Watter (footnote 41), Article 752 No. 18 et seq.

39 Article 1 lit. b FINSO.

40 Article 69 Paragraph 2 FinSA.

41 Bohrer/Rehm/Huggenberger/Spiegel/Vollenweider (footnote 46), p. 45.

42 Dieter Gericke/Stefan Waller, Basler Kommentar: Articles 530–964 OR (Honsell, Vogt and Watter (eds.) (Fifth Edition, Basle, 2016), Article 754 No. 24.

43 Article 154 FMIA.

44 Article 155 FMIA.

45 Decision of the Swiss Federal Criminal Court dated 12 September 2018 No BB.2017.123, Cons. 1.5. with regard to insider information. The considerations there are applicable also to market manipulation.

46 Amadò, AJP 2018, 990, 999.

47 Liability based on created expectations includes also liability concerning the breach of pre-contractual duties when negotiating a contract, known as culpa in contrahendo, Thomas Jutzi, Unternehmenspublizität Grundlinien einer rechtlichen Dogmatik zur Offenlegung von unternehmensbezogenen Informationen, 2017, No. 581 w.f.r.; Hans Capsar von der Crone/Olivier Baum, Aktienrechtliche Verfahren: Klagemöglichkeiten und Klagerisiken, GesKR 2016, 278, 290; Dieter Gericke/Stefan Waller (footnote 47), Article 754 No. 24.

48 DFT 134 III 390, 395.

49 DFT 130 III 345, Cons. 2.1 et seq.

50 DFT 132 III 718, Cons. 2.1.

51 Watter (footnote 41), Article 752 No. 26.

52 Dispatch on FinSA and FinIA (footnote 20), p. 8993.

53 DFT 132 III 718, Cons. 2.1. and Cons. 3.2.

54 DFT 132 III 718, Cons. 3.2.1.

55 Dispatch on FinSA and FinIA (footnote 20), p. 8993.

56 BGE 123 III 110, Cons. 3(a).

57 Against this see Bohrer/Rehm/ Huggenberger/Spiegel/ Vollenweider (footnote 46), p. 44.

58 Kurzkommentar Obligationenrecht-Schönenberger (First Edition, Berne, 2014), Vor Art. 41-61, No. 7.

59 Nobel (footnote 7), p. 1230 No. 273.

60 DFT 131 III 306, Cons. 2.1.

61 DFT 113 II 283, 289 et seq.

62 Watter (footnote 41), Article 752 Nos. 9, 9a.

63 Watter (footnote 41), Article 752 No. 10.

64 Swiss Parliament, Second session 29 May 2018, Official Bulletin 2018 N 613.

65 Dispatch on FinSA and FinIA (footnote 20), p. 8992.

66 Bohrer/Rehm/ Huggenberger/Spiegel/ Vollenweider (footnote 46), p. 44.

67 Nobel (footnote 7), p. 1230 No. 273.

68 Dispatch on FinSA and FinIA (footnote 20), p. 8992.

69 In portfolio management, the asset manager has an obligation to make the investment decisions and adopt the investment strategy, whereas an investment adviser is only supposed to give investment advice but not act on its own. Christoph Gutzwiller, Schadensstiftung und Schadensberechnung bei pflichtwidriger Vermögensverwaltung und Anlageberatung, SJZ 2005, 359.

70 Gutzwiller (footnote 86), SJZ 2005, 357, 362.

71 These obligations are based on Article 398 Paragraph 2 CO; Gutzwiller (footnote 86), SJZ 2005, 357, 360.

72 See Portfolio Management Guidelines 2017, 20170301-3200-ALL-RL_Mini_Revision_Portfolio%20Management%20Guidelines_E_final-CLA.pdf, available at (retrieved on 30 April 2020).

73 Gutzwiller (footnote 86), SJZ 2005, 357, 358.

74 Gutzwiller (footnote 86), SJZ 2005, 357, 361, 236.

75 Fleur Baumgartner/Hans Caspar von der Crone: Die Pflichten der Finanzdienstleister im Anlagegeschäft SZW/RSDA 2/2019, 225, 236.

76 David Oser / Rolf H. Weber, Basler Kommentar: Article 398 OR (Honsell, Vogt and Watter (eds.), Seventh Edition, Basle, 2019), Article 398 No. 28b.

77 Wolfgang Wiegand, Basler Kommentar: Article 1-529 OR (Honsell, Vogt and Wiegand (eds.), Sixth Edition, Basle, 2015), Article 97 No. 41.

78 DFT 120 II 250.

79 Based on Article 100 Paragraph 1 and Article 100 Paragraph 2 CO, liability may not be excluded for unlawful intend or gross negligence in advance.

80 Article 127 CO.

81 DFT 130 III 597.

82 Article 15 Paragraph 1 FinSA.

83 Article 16 Paragraph 2 FinSA.

84 Article 72 Paragraph 1 FinSA.

85 Article 72 Paragraph 1 FinSA.

86 Article 73 Paragraph 2 FinSA.

87 Article 73 Paragraph 3 FinSA.

88 Article 73 Paragraph 4 FinSA.

89 Bühler Christoph B., Stärkung der Ombudsstelle, SZW 2019, 559, 559.

90 FINMA-Vertriebsbericht 2010, p. 7.

91 Article 75 Paragraph 2 FinSA.

92 Article 76 Paragraph 2 FinSA; Bühler (footnote 107), SZW 2019 p. 559, 559.

93 Article 40 CPC.

94 There are commercial courts in the cantons of Aargau, Berne, St Gallen and Zurich.

95 Pursuant to Article 6, Paragraph 1 and 2 CPC the dispute must be decided by the commercial court if it concerns commercial activity of at least one party (which will always be the case with regard to Article 69 FinSA), the decision is subject to an appeal with the Swiss Federal Court (if the amount in dispute is of at least 30,000 Swiss francs) and the parties are registered in a commercial registry. In cases where only the respondent is registered in a commercial registry and all the other prerequisites are met, the claimant may choose between the commercial court and the district courts.

96 Articles 197 et seq. CPC.

97 Article 198 lit. f and 199 CPC.

98 Article 8 CPC.

99 Article 308 et seq. CPC.

100 Article 72 SCS.

101 Article 95 et seq. SCS.

102 Article 71 CPC.

103 Article 125 lit. c CPC.

104 Article 106 CPC.

105 Article 96 CPC.

106 Article 208 Paragraph 2 and Article 241 Paragraph 2 CPC.

107 Thomas Sutter-Somm, Schweizerisches Zivilprozessrecht (Third Edition, Zurich, 2017), p. 303 et seq.

108 Namely, the prospectus liability or the liability for administration, business management and liquidation, the auditors' liability (Article 69 FinSA and Articles 753 et seq. CO).

109 See for the discussion of this issue and possible solutions, Reto Thomas Ruoss, Vergleiche bei Verantwortlichkeitsklagen: Praktische Probleme, 2008; Peter Isler, Der aussergerichtliche Vergleich mit einzelnen aktienrechtlich verantwortlichen Organpersonen, Wirtschaftsrecht zu Beginn des 21. Jahrhunderts, Robert Waldburger/Charlotte M Baer/Ursula Nobel/Benno Bernet (eds.) (Berne, 2005), p. 199 et seq.

110 Article 155 FMIA.

111 Article 120 FMIA.

112 Article 135 FMIA.

113 Article 1 Paragraph 2 Act on Banks and Savings Banks.

114 Article 50 Paragraph 1 FINMASA.

115 Article 156 Paragraph 1 FMIA.

116 Article 50 Paragraph 1 FINMASA and Article 1 of the SCP.

117 Article 50 Paragraph 2 FINMASA.

118 Article 53 of the Criminal Act.

119 Article 145 FMIA.

120 Article 144 FMIA.

121 Article 154 et seq. FMIA.

122 Article 151 et seq. FMIA.

123 Article 148 Paragraph 1 lit. f CISA.

124 Dispatch on FinSA and FinIA (footnote 20), p. 9003.

125 Bohrer/Rehm/ Huggenberger/Spiegel/ Vollenweider (footnote 46), p. 46.

126 For example, the Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters or the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters.

127 Article 2 Paragraph LC.

128 Article 5 Paragraph lit. b LC.

129 Article 5 Paragraph 3 LC.

130 Article 15 LC.

131 Article 2 PILA.

132 Article 113 PILA.

133 Article 129 PILA.

134 Article 114 PILA.

135 Article 151 Paragraph 1and Paragraph 2 PILA.

136 Article 151 Paragraph 3 PILA. The jurisdiction at the place of issue of securities may not be excluded by a forum clause.

137 Article 116 PILA.

138 Article 120 PILA.

139 Article 133 Paragraph 1 PILA.

140 Article 133 Paragraph 2 PILA.

141 Article 156 PILA and Article 154 PILA.

142 Article 42 et seq. FINMASA.

143 Article 42 Paragraph 1 FINMASA.

144 Case No. B-117/2018.

145 Aufsichtsmitteilung 04/2017 of 29 September 2017 by FINMA.

146 FINMA, Wegleitung für Unterstellungsanfragen betreffend Initial Coin Offerings (ICOs) of 16 February 2018.

147 Bohrer/Rehm/ Huggenberger/Spiegel/ Vollenweider (footnote 46), p. 47.

148 Nobel (footnote 7), p. XXXVIII No. 74.

149 Bohrer/Rehm/ Huggenberger/Spiegel/ Vollenweider (footnote 46), p. 10.

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