FINMA Revokes Fund Manager Licence and Rejects Portfolio Manager Authorisation Over FinSA Breaches
Switzerland's Financial Market Supervisory Authority (FINMA) has concluded enforcement proceedings against two financial services firms and one individual, revoking a fund manager's licence, rejecting a portfolio manager's application for authorisation, imposing a multi-year industry ban, and confiscating over CHF 3 million in illegally earned commissions. The action, finalised on 1 May 2026, signals that FINMA will use the full range of its powers under the Financial Services Act (FinSA) when supervised entities place their own financial interests ahead of clients.
What Triggered the Proceedings
During routine supervisory work, FINMA identified that both Swiss Fund Management AG (SFM) and BZ Berater Zentrum AG (BZ) had channelled substantial client assets into illiquid bonds linked primarily to overseas real estate development projects. The bonds were issued by entities that were all affiliated with one another, creating overlapping relationships that FINMA concluded constituted undisclosed conflicts of interest.
Key structural problems FINMA identified
- Bond issuers were mutually affiliated and non-operational; proceeds were transferred on an unsecured basis to real estate investment companies controlled by the individuals involved.
- Part of the bond proceeds financed the operational costs of SFM and BZ themselves, creating a direct financial loop between client money and the firms managing it.
- The individuals involved also arranged personal loans of tens of millions from the same pool of funds.
- Around 2,000 BZ asset management mandates were affected, with approximately CHF 200 million invested, directly or through funds, in these illiquid bonds.
FINMA concluded that investors received no adequate disclosure of these embedded conflicts, and that the bonds were unsuitable given clients' risk profiles and pension-provision objectives. The authority characterised the conduct as a systematic subordination of investor interests to the firms' own financial self-interest, constituting a serious breach of the appropriateness and suitability obligations under the FinSA.
Measures FINMA Ordered
FINMA's response was multi-pronged. Each measure targets a distinct aspect of the misconduct.
Licence revocation and liquidation
SFM's licence as a manager of collective assets (funds) was withdrawn. FINMA simultaneously appointed Grant Thornton AG, previously acting as investigating agent during the proceedings, to serve as liquidator. This structure is designed to preserve and realise whatever asset value remains for investors.
Rejection of portfolio manager authorisation
BZ had applied for authorisation as an independent portfolio manager under the FinSA regime. FINMA rejected that application outright. BZ was required to cease all asset management activities within 30 days of receiving the ruling. The precautionary measures FINMA had imposed during the investigation, which allowed the authority to monitor and support BZ's day-to-day operations, remained in place until the ruling became final. Crucially, FINMA did not suspend repayments or interest payments on existing bond investments, meaning those flows could continue for the benefit of existing investors.
Industry ban and profit confiscation
One individual with responsibility for the misconduct received a multi-year industry ban. FINMA also confiscated over CHF 3 million in commissions that BZ and the individual had earned from placing illiquid bonds with clients, calculated from the date the FinSA rules of conduct came into force. The ruling was not contested within the appeal period and has entered into legal effect.
Investor Redress Pathway
Roughly 150 people had already initiated mediation proceedings against BZ before the enforcement concluded. OFS Ombud Finance Switzerland, the relevant financial ombudsman, confirmed it would now commence mediation with those individuals given that FINMA's proceedings are complete. This pathway matters for affected clients seeking to recover losses without resorting to litigation.
Accounting firms and auditors advising clients with Swiss-domiciled asset managers or portfolio managers should review the how FINMA's portfolio management guidance affects crypto sub-ledger obligations and note that a comparable pattern of licence withdrawal was recently seen in the wider Alpine region, as covered in our analysis of FMA Liechtenstein's parallel licence dismissal for fund services.
What This Means for Compliance Teams
The case crystallises several compliance priorities under the FinSA and the broader Swiss supervisory framework.
Conflict-of-interest documentation
FINMA's findings make clear that undisclosed structural conflicts, where the manager profits from client allocations to its own affiliated issuers, are treated as a serious regulatory breach. Firms must document every conflict systematically and disclose it to clients before investing their assets. Internal policies that merely identify conflicts at an abstract level are insufficient; FINMA expects evidence that disclosure actually reached each affected client.
Appropriateness and suitability under FinSA
The FinSA requires financial service providers to assess whether a product or service is appropriate and suitable for a client before recommending or executing it. FINMA's ruling is explicit that illiquid, concentrated bond allocations made to clients whose mandate was pension provision failed both tests. Compliance functions should treat illiquidity and concentration risk as hard triggers for enhanced suitability review, not just soft factors.
Supervisory cooperation and the investigating agent tool
FINMA's appointment of an investigating agent during the proceedings, and the subsequent conversion of that agent into the liquidator, illustrates the authority's willingness to use intrusive oversight tools early. Firms subject to on-site inspections that reveal material concerns should expect that precautionary measures, including operational monitoring, could follow quickly.
Did FINMA prohibit repayments on the bonds held by investors?
No. While FINMA ordered BZ to cease asset management activities and revoked SFM's licence, it explicitly did not suspend repayments or interest payments on existing bond investments. Those flows may continue for the benefit of investors.
What is the legal basis for FINMA's profit confiscation?
FINMA confiscated the commissions under its supervisory powers, treating them as illegally generated profits from placements made in breach of the FinSA rules of conduct. The confiscation covers the period from when those rules came into force.
Why was BZ's portfolio manager authorisation rejected rather than revoked?
BZ had applied for authorisation as an independent portfolio manager but had not yet received it. FINMA therefore rejected the application rather than revoking an existing licence, which is the applicable procedure when a firm has not yet been formally authorised.
What recourse do affected investors have?
Approximately 150 investors had already initiated mediation proceedings with OFS Ombud Finance Switzerland before the enforcement concluded. The ombudsman confirmed it will now commence mediation with those individuals. Investors may also consider civil claims, though that is outside FINMA's remit.
What does the multi-year industry ban cover?
The ban prevents the named individual from working in a management or governance role at a FINMA-supervised entity for the duration of the ban. FINMA has not published the individual's identity but has confirmed the ruling is final.
FAQ
No. While FINMA ordered BZ to cease asset management activities and revoked SFM's licence, it explicitly did not suspend repayments or interest payments on existing bond investments. Those flows may continue for the benefit of investors.
FINMA confiscated the commissions under its supervisory powers, treating them as illegally generated profits from placements made in breach of the FinSA rules of conduct. The confiscation covers the period from when those rules came into force.
BZ had applied for authorisation as an independent portfolio manager but had not yet received it. FINMA therefore rejected the application rather than revoking an existing licence, which is the applicable procedure when a firm has not yet been formally authorised.
Approximately 150 investors had already initiated mediation proceedings with OFS Ombud Finance Switzerland before the enforcement concluded. The ombudsman confirmed it will now commence mediation with those individuals. Investors may also consider civil claims, though that is outside FINMA's remit.
The ban prevents the named individual from working in a management or governance role at a FINMA-supervised entity for the duration of the ban. FINMA has not published the individual's identity but has confirmed the ruling is final.