Retrocession - Swiss Federal Court Confirmed Criminal Sanctions (Fraud and Mismanagement of Property)

Federal Court ruling dated 14 August 2018 and published on 14 May 2019,  confirmed that the board of directors of a wealth management company has a duty to protect the rights of the company’s clients. Thus, withholding information owed to clients or providing misleading information or omitting to report in violation of the duty of good care and fidelity (section 398 para. 2 of the Swiss Code of Obligations) is deemed to trigger a criminal  fraud (by omission) within the meaning of section 146 of the Swiss Criminal Code and may constitute an act of mismanagement of the board of directors towards the company’s clients punishable under section 158 of the Swiss Criminal Code. Thus, it is important to provide clients with clear and accurate information on retrocessions/incentives received to avoid possible criminal proceedings.

Please contact Dominique Lecocq at info@lecocqassociate.com in case of questions.