The amended Article 38 of the Swiss Securities Act, which
came into force on February 1 2006, aids and accelerates
administrative assistance for regulatory purposes.
The long-arm principle, under which the Swiss Federal
Banking Commission was responsible for information transmitted
to the requesting foreign state, has been dropped. The
principle of double criminality was also repealed in the field
of stock exchange and securities trading offences.
Under the amended provision, foreign authorities are
entitled to forward received information to other authorities,
courts or bodies without the approval of the Swiss Federal
Banking Commission, provided the information is solely used for
the enforcement of regulations on stock exchanges, securities
trading and securities brokers. The transmission of the
received information for other purposes still requires the
approval of the Swiss Federal Banking Commission and must
fulfil the prerequisites for legal assistance, in particular
the condition of double criminality.
The revision has also loosened the principle of
confidentiality. According to the revised provision, the
foreign authority may disclose received information if the
provisions on public proceedings and the information of the
public require so in the foreign state.
Fishing expeditions by the requesting foreign authority are
prevented by the express embodiment of the principle of
appropriateness. The Swiss Federal Banking Commission may not
transmit information on persons who obviously are not involved
in the matter being investigated. The Swiss Federal Banking
Commission cannot, however, examine the facts stated by the
foreign state in the assistance request or analyse the
transaction that gave rise to the assistance request.
By the revision, the administrative assistance of the Swiss
Federal Banking Commission was brought in line with
international standards, in particular Iosco and the EC
Directive on Insider Dealing and Market Manipulation.
The revised administrative assistance appears to be
efficient. This, however, remains to be seen in practice. The
Swiss legislator is confident that the new law on
administrative assistance rebuts the accusation that
Switzerland makes market abuse possible.