Securities regulator investigating potential breaches by Swiss-based financial institution
Vancouver – The Executive Director of the British Columbia Securities Commission has issued a temporary order and notice of hearing alleging that a Swiss private bank breached securities laws by engaging in trading and advising in securities within B.C. without being registered.
The Executive Director issues temporary orders in situations where the length of time required to hold a hearing could be prejudicial to the public interest. The temporary order will allow staff to advance their ongoing investigation of Bank Gutenberg’s activities.
The notice alleges that Bank Gutenberg (formerly CAT Brokerage AG), a Swiss private bank and investment dealer offering offshore brokerage services, carried out trades and provided securities advice on behalf of at least two B.C. residents without being registered to do so.
Furthermore, BCSC staff alleges that Bank Gutenberg offered its services through its website without prominently posting a disclaimer that expressly identifies the foreign jurisdictions in which the offering or solicitation is qualified to be made, and failed to take reasonable precautions not to sell to B.C. residents.
The notice also states:
• Bank Gutenberg employs two former B.C. registrants with regulatory enforcement histories on their night desk to trade on the TSX Venture Exchange (TSX-V).
• As of February 2013, Bank Gutenberg held sixteen trading accounts (all in its own name) with six different Vancouver brokerage firms. Bank Gutenberg used these accounts to trade securities of B.C. reporting issuers on the TSX-V.
• Bank Gutenberg representatives conduct trips to Vancouver to meet with B.C. registrants and other B.C. market participants.
• BCSC staff strongly suspects that there are other B.C. residents who trade through Bank Gutenberg; however the bank has refused to answer direct enquiries, claiming that Swiss secrecy laws do not permit them to directly provide the requested information, and Swiss criminal laws prohibit them from complying with orders or requests from foreign authorities.
Staff maintains that Bank Gutenberg’s refusal to provide BCSC staff with the names, account information, and account statements for all B.C. residents who have beneficially held accounts with it makes the company unsuitable to engage in securities-related activities in, or connected with, B.C.
These allegations have not been proven. Counsel for the Executive Director will apply to extend the temporary order on August 22, 2013 at 10:00am.
The B.C. Securities Commission is the independent provincial government agency responsible for regulating trading in securities within the province. You may view the notice of hearing on our website www.bcsc.bc.ca by typing Bank Gutenberg or 2013 BCSECCOM 231 in the search box. Information regarding disciplinary proceedings can be found in the Enforcement section of the BCSC website.
Please visit the Canadian Securities Administrators’ Disciplined Persons List for information relating to persons disciplined by provincial securities regulators, the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association (MFDA).
For media inquiries, contact Richard Gilhooley, media relations, 604-899-6713. For public inquiries, call 604 899 6854 or 1 800 373 6393 (toll free).
Learn how to protect yourself and become a more informed investor at www.investright.org
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