by Finma closes proceedings against Leonteq and confiscates profits Keystone-SDA Listen to the article Listening the article Toggle language selector English (US)
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Swiss derivatives specialist Leonteq acted in serious violation of regulatory obligations and has been forced to hand over CHF9.3 million in profits to the Swiss Financial Market Supervisory Authority (FINMA).
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In connection with the distribution of its financial market products by a number of distributors abroad, Leonteq had “seriously” breached its risk management obligations, FINMA announced on Thursday. Accordingly, it has ordered “measures to restore compliance”.
According to the decision, Leonteq may now only work with foreign distributors that are subject to regulation comparable to that in Switzerland. Finma will appoint an auditor to monitor the correct implementation of the measures. In addition, the authority has ordered Leonteq to disgorge profits amounting to CHF9.3 million.
Insufficiently monitored
The case began in 2022. Finma opened enforcement proceedings based on external information, press reports and reports from Leonteq itself. The Financial Times, for example, wrote in October 2022, citing whistleblowers, that the Zurich-based derivatives boutique may have allowed money laundering and tax evasion.
The investigation has now shown that Leonteq did not adequately monitor its distribution chain, Finma writes further. In addition, the financial group worked “in some cases with dubious, unregulated distributors”.
The business model of these distributors had not been subject to sufficient critical scrutiny, although various contradictions had emerged. As a result, some of these distributors later sold Leonteq’s structured investment products in countries that were not contractually intended for them and for which they were not licensed. The distributors had thus violated not only contractual but also regulatory provisions, exposing Leonteq to considerable risks.
Profit forecast lowered
FINMA acknowledges that Leonteq has already taken extensive organisational and process measures in recent years, including expanding compliance and distribution controls and terminating suspicious distributors.
Leonteq writes in its own press release that it has cooperated fully with FINMA and regrets the shortcomings identified. The management had already taken comprehensive organisational measures in recent years, which had also been acknowledged by FINMA. The additional measures ordered would be implemented “with high priority”.
The penalty also has an impact on the business result. Leonteq now expects a pre-tax profit in the single-digit million range for the full year 2024. Previously, Leonteq wanted to exceed the net profit from the previous year (CHF20.6 million).
Translated from German by DeepL/mga
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