Finma closes proceedings against Leonteq and confiscates profits
Keystone-SDA
Swiss derivatives specialist Leonteq seriously violated regulatory obligations and was forced to hand over 9.3 million francs in profits to the Swiss Financial Market Supervisory Authority (FINMA).
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As part of the distribution of its financial market products by several distributors abroad, Leonteq “seriously” failed to fulfill its risk management obligations, FINMA announced on Thursday. As a result, he ordered “measures to restore compliance.”
According to the decision, Leonteq can now only work with foreign distributors subject to regulations comparable to those in Switzerland. Finma will appoint an auditor to monitor the proper implementation of the measures. In addition, the authority ordered Leonteq to return profits amounting to 9.3 million francs.
Insufficiently monitored
The case began in 2022. Finma opened enforcement proceedings based on external information, press articles and reports from Leonteq itself. The Financial Times, for example, wrote in October 2022, citing whistleblowers, that the Zurich-based derivatives store could have enabled money laundering and tax evasion.
The investigation has now shown that Leonteq had not sufficiently monitored its distribution chain, Finma writes. Furthermore, the financial group worked “in certain cases with questionable and unregulated distributors”.
The economic model of these distributors has not been subjected to sufficient critical examination, even if various contradictions have emerged. As a result, some of these distributors subsequently sold Leonteq’s structured investment products in countries which were not contractually intended for them and for which they were not authorized. The distributors had thus violated not only contractual but also regulatory provisions, exposing Leonteq to considerable risks.
Profit forecasts revised downwards
FINMA acknowledges that Leonteq has already taken extensive organizational and procedural measures in recent years, including expanding compliance and distribution checks and terminating suspicious distributors.
Leonteq writes in its own press release that it has fully cooperated with FINMA and regrets the shortcomings noted. In recent years, management had already taken extensive organizational measures, which were also recognized by FINMA. The additional measures ordered would be implemented “with high priority.”
The penalty also has an impact on the commercial result. Leonteq now expects pre-tax profit in the region of several million dollars for the full year 2024. Previously, Leonteq wanted to exceed the previous year’s net profit (CHF 20.6 million). .
Translated from German by DeepL/mga
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