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Switzerland

At present the Swiss criminal code (SCC) does not contain an express provision making the manipulation of stock prices a criminal offence. However, this will change with a new provision, Article 161bis SCC, scheduled to come into force in the course of 1997. This sets out the kinds of manipulation of stock prices punishable by law and reads as follows:

"Whosoever with the aim of significantly influencing the price of securities traded on a Swiss stock exchange in order to obtain personally or for any other person an unlawful gain:

  • intentionally circulates misleading information; or
  • purchases and sells securities whereby both sides to the transaction act directly or indirectly for the account of the same person or of persons linked for such a purpose

shall be punished by imprisonment for up to three years or with a fine."

In a recent case before the Swiss Supreme Court, the Court was asked to rule on whether Swiss authorities can grant judicial assistance in criminal matters to France in connection with an alleged manipulation of stock prices. Despite the fact that the new Article 161bis SCC is not yet in force, and hence the principle of mutuality of criminal liability, a prerequisite for granting international judicial assistance in criminal matters, would appear not to be met, the Swiss Supreme Court held that the Swiss authorities may grant assistance to France in this matter.

The Court held that the principle of mutuality of criminal liability could also be met where manipulations of stock prices constitute the more general offences of fraud under Article 164 SCC or maliciously caused damage under Article 151 ICC, as was found in the case at issue.

The ruling of the Swiss Supreme Court is remarkable in two respects:

  • Both a number of legal commentators and the federal government, who drafted and commented on the new Article 161bis SCC, were of the opinion that the manipulation of stock prices cannot be deemed fraud within the meaning of Article 164 SCC.
  • The federal government and parliament sought to limit the scope of Article 161bis SCC (which they considered a new offence) by specifically inserting the phrase "for personal gain". This was done to partly permit the practice of stabilizing the price of certain stocks before a distribution of new stock. It must be assumed that this specific element now fails to limit the area of potentially punishable action, but merely leads to the application of Article 151 SCC.

Thus, in future three provisions instead of one may be applicable to practices affecting stock prices.

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