Basler bank replaces CEO over FX trading scandal

Guy Lachappelle, head of institutional clients at Basler Kantonalbank, has been appointed interim chief executive, replacing Hans Rudolf Matter.

Matter has stepped down after a report commissioned by the bank found it should have done more to protect its clients from a scandal involving FX trading at its subsidiary ASE Investment.

Swiss regulator FINMA began an investigation into ASE in March, when BKB first reported an offence. A client had noticed irregularities in account documents received from ASE. BKB estimated its clients could have lost more than CHF100m. 

FINMA concluded its investigation in May, and withdrew the trading licence from ASE. FINMA noted the firm was indebted, and the firm was made bankrupt by court order of the Obwalden Canton authorities.

In a statement in May, FINMA said “it is investigating whether the company dealt in securities without holding a licence. It is also investigating whether ASE illegally accepted deposits from the public. Based on the findings at this stage of the investigations, the financial impact is high.” 

FINMA said ASE Investment had been operating for some time as an independent asset manager focusing on the forex business. For this activity, it requires a licence under the Anti-Money Laundering Act.

FINMA estimated that more than 500 investors had been victims, “to whom ASE promised very high returns”. The regulator said the investors “were victims of business practices that are the subject of the ongoing investigations: FINMA is investigating unauthorised securities dealing and prohibited acceptance of deposits from the public. It is also analysing the conduct of banks with which ASE had placed deposits.”

Three of BKB’s Zurich-based employees have been dismissed. Four more employees have been given written warnings after an investigation found they had failed to be vigilant, placing too much trust in ASE statements.

A spokesman from FINMA confirmed the regulator has opened an investigation into BKB, to establish how the bank dealt with legal and reputational risk. 

BKB said it had no evidence its employees had broken any laws in relation to ASE.

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