Praetorian Trust

FINMA Acted Unlawfully In UBS Case, Swiss Court Rules

Switzerland’s Federal Administrative Court has ruled that the order issued by the Financial Market Supervisory Authority (FINMA) to disclose UBS client information to US authorities was unlawful.

According to the Court, FINMA did not have the right to issue the order under its own authority, but should instead have referred the matter to the Federal Council for approval. The Court judged that in this case, neither the Swiss Banking Act, nor the right of constitutional necessity could be invoked.

FINMA ordered the disclosure of UBS client information to the Internal Revenue Service back in February last year. Complaints against FINMA have subsequently been made by clients.

While the court expressly acknowledged the difficult situation in which FINMA had been placed, it nevertheless stipulated that Articles 25 and 26 of the Swiss Banking Act were insufficient grounds on which to base its decision.

Although these measures allow FINMA to take preventative measures if there is a risk of bank insolvency, they do not authorise the supervisory authority to directly disclose client information,according to the court.

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