Retrocessions: Criminal Consequences Of Non Disclosure

In a recent decision 6B_689/2016 of 14 August 2018, the Swiss Federal Supreme Court held that the failure to disclose adequately retrocessions may constitute an act of criminal mismanagement. After a short summary of the legal framework governing the disclosure of retrocessions, the present briefing analyses this decision and its practical impact in particular for Swiss financial institutions dealing with external asset managers.

Background

Retrocessions and other distribution fees paid to asset managers have been the subject of major legal development over the past 12 years in the Swiss banking and financial sector. Over the course of several groundbreaking decisions (FSC 132 III 432; FSC 137 III 393; FSC 138 III 755), the Swiss Federal Supreme Court held that an asset manager was entitled to retain retrocessions and other distribution fees it received in connection with its mandate only on the basis of a comprehensive waiver based on an informed consent,