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Finma Forces Basler Kantonalbank to Give Up Profit on Misconduct

Swiss Financial Market Supervisory Authority Headquarters
Signage is displayed outside the headquarters of the Swiss Financial Market Supervisory Authority in Bern. Photographer: Adrian Moser/Bloomberg

The Swiss financial watchdog Finma has told Basler Kantonalbank to give up 2.64 million Francs ($2.88 million) in illegally generated profits after violating market conduct rules.

The Swiss regional lender “inadmissibly propped up the market price of its own participation certificates” between January 2009 and September last year, the Swiss Financial Market Supervisory Authority, or Finma, said today in a statement. The bank said it’s already started measures to prevent a repeat of such misconduct.

The Basel, Switzerland-based bank is one of 14 Swiss financial firms under investigation by the U.S. Department of Justice for allegedly helping Americans avoid taxes by hiding their assets in secret Swiss bank accounts. Finma ordered UBS AG, Switzerland’s biggest lender, to disgorge 59 million francs in profits in December last year for trying to rig global interest rates.

“Basler Kantonalbank tried to halt or at least soften the decline in prices caused by the U.S. tax dispute from the fall of 2011,” by buying its own certificates on the stock exchange, the lender said in a statement. “These supportive purchases were deemed inadmissible by Finma.”

Basler Kantonalbank shares fell as much as 2.3 percent to 71.10 francs and were trading at 72.35 francs at 12:12 p.m. in Zurich, giving the bank a market value of 2.27 billion francs.

The lender decided to stop influencing the price of its certificates in November 2011 and switch to a trading model based on set parameters instead, it said in the statement. Finma found the bank hadn’t committed a criminal offense or harmed investors, it said.

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