Insider trading in court Cantonal banker rips off with secret information and loses everything
A St. Gallen banker knew which shares his employer would soon be moving on a large scale. He used this knowledge to pocket 33,000 francs - until the insider trading was discovered and he was brought to court.
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- A banker at St. Galler Kantonalbank used secret information from the internal trading system for private stock market transactions.
- He made a profit of over 33,000 francs.
- The Office of the Attorney General of Switzerland sentenced him to a conditional fine for multiple counts of insider trading and confiscated the profits.
Insider trading is prohibited. Anyone who has access to confidential information and could make a lot of money from it knows this. Insider trading is when someone buys or sells shares or other securities because they have secret knowledge - or good reason to hope for a price movement.
A banker at St. Galler Kantonalbank nevertheless entered into such a transaction. This is revealed in a summary penalty order from the Office of the Attorney General, which blue News was able to view. In 2023, the man had access to an internal banking system in which planned major purchases and sales of shares were listed.
Among other things, he knew in which months extensive transactions involving shares in the Basel-based pharmaceutical company Idorsia and the Schaffhausen-based industrial group Georg Fischer were planned.
In the case of last year's stock market star Idorsia, for example, it was stipulated that around 650,000 shares were to be acquired by the end of May 2023 at the latest. At Georg Fischer, for example, around 450,000 shares were to be purchased by November 8, 2023 at the latest. Some of these transactions were carried out by the banker himself, others by team colleagues.
He gambled privately before wholesaling at the company's expense
However, the banker did not only trade professionally: even before the planned bank transactions, he logged into his personal account at Swissquote. Among other things, he purchased "call options" on Idorsia shares there. Such stock market products entitle the holder to buy the share at a predetermined price and are a bet on rising prices.
The banker bought 100 call options at CHF 0.87 each with an exercise price of CHF 7.60 and a term until June 2023. The options gave him the right to purchase 100 shares at this price - regardless of the actual share price. He also carried out similar transactions with Georg Fischer shares.
According to the Office of the Attorney General of Switzerland, the banker had good reason to believe that the planned large-scale transactions were highly likely to have a significant impact on the share price. This expectation was fulfilled: Idorsia's share price rose by more than ten percent in June 2023.
The banker thus made a whopping net profit of CHF 33,095.45 from the private transactions.
Banker is sentenced, profit is confiscated
However, he was not allowed to keep this amount. It is not clear from the penalty order how the case came to light. One thing is clear: In April 2024, the banker fully confessed. He cooperated with the authorities and, according to the Office of the Attorney General, showed insight and remorse.
The sentence was correspondingly lenient. He received a fine of 90 daily rates of CHF 640 each for multiple exploitations of insider information. He only has to pay these 57,600 francs if he commits another offense during the two-year probation period. However, he must pay a fine of 2,000 francs. He will also have to pay CHF 3,000 in legal costs.
The unlawfully obtained profit is also gone: the banker transferred this to the cantonal bank before the conviction, with the note "Compliance violation". The bank intends to forward the amount to the Federal Treasury after the conviction becomes final.
Banker no longer works for Kantonalbank
The case also had professional consequences: The banker no longer works at St. Galler Kantonalbank, as its media spokeswoman Jolanda Meyer reported on request.
The case of the St. Gallen banker is not an isolated incident: insider trading has increasingly become the focus of the authorities in Switzerland in recent years. The reason for this is that better monitoring systems and stricter reporting obligations are bringing more cases to light. As a result, bankers are less and less able to hide lucrative insider trading under the guise of "personal responsibility".
St. Galler Kantonalbank emphasizes that it informs its employees about the applicable regulatory and criminal law requirements by means of internal directives, training and targeted instructions. Additional training courses are available for certain specialist departments. The regulations and organization in the area of insider trading are in line with the industry and effective, according to the spokeswoman.