Switzerland’s financial markets regulation is under scrutiny due to its dysfunctional regulatory framework. Unlike the United States, which has a functional regulatory framework with proper checks, balances, and effective recourse in cases of regulator misconduct, Switzerland lacks proper oversight and recourse when the regulator behaves badly.
The Securities and Exchange Commission (SEC) in the U.S. admitted to making inaccurate statements in a lawsuit against a crypto startup, DEBT Box. Such an admission would be inconceivable in Switzerland, where the regulator has absolute power. There are no effective checks or balances on the Swiss Financial Market Supervisory Authority’s (FINMA) power. Regardless of its actions, FINMA is answerable to no one.
In the U.S., the SEC is largely subject to the court system, where it can be challenged if it behaves badly or lies. Misrepresentation, or lying, by the regulator in Switzerland goes unchecked and unpunished. In the U.S., regulators can be sanctioned and fact-checked under the U.S. Freedom of Information Act.
However, in Switzerland, independent fact-checking is nearly impossible. This is largely due to the Swiss Parliament’s decision to exclude FINMA from the Swiss Freedom of Information Act, thereby exempting the regulator from transparency obligations. This lack of transparency guarantees bad behavior and places substantial obstacles to judiciary or executive accountability.
The Dodd Frank Act of July 2010 in the U.S. included a provision that excluded the SEC from requests under the Freedom of Information Act. This was repealed two months later when it became clear that shielding the regulator from disclosure requirements was a bad idea. This fundamental principle has been ignored in Switzerland.
The Financial Market Supervision Act, FINMASA, in Switzerland is seen as an act of insanity. Under “Independence and Supervision”, it states that the regulator deals with the Federal Council via the FDF and that the National Council and the Council of States are responsible for its superintendence. In practice, this means zero oversight or supervision from the FDF, the Nationalrat, the Ständerat, or the Bundesrat.
The result is an unaccountable, unfit market regulator, subject to zero oversight or control, with no penalties for lying or bad behavior. The major threat to financial services in Switzerland is not the banks or the financial sector, but an out-of-control market regulator. This situation is destructive to Switzerland, given the size and importance of the financial sector in the economy. The entire construct of FINMASA needs to be repealed and rewritten.
This News Article was automatically generated by Bob the Bot (AI)
| Information | Details |
|---|---|
| Geography | Europe |
| Countries | 🇨🇭 🇺🇸 |
| Sentiment | very negative |
| Relevance Score | 1 |
| People | None |
| Companies | The Securities and Exchange Commission, Council of States, National Council, Federal Council, Swiss Parliament, FINMA |
| Currencies | None |
| Securities | None |
