Switzerland

SWISS SECURITIES CLASS ACTIONS?

Eidgenössische Finanzmarktaufsicht (FINMA)
Autorité de Surveillance des Marchés Financiers (FINMA)

The Swiss federal Financial Market Supervisory Authority (FINMA) issued in October 2010 a Discussion Paper on regulation of the production and distribution of financial products to retail clients (“FINMA Distribution Report 2010”) and launched a public consultation in November 2010.  The U.S. Chamber Institute for Legal Reform ("ILR") submitted comments in response to the FINMA Discussion Paper in June 2011.

The FINMA Distribution Report 2010 indicates that FINMA is considering whether it would be desirable for Switzerland to authorize class actions as a mechanism for the collective resolution of the claims of retail investors harmed by incorrect or misleading prospectus information, and perhaps other improper financial market practices as well.  As the report explains, Swiss law already permits the collective representation of investor interests through joint actions and the bringing of multiple claims.  But the Swiss legislature has to this point explicitly chosen not to make the class action mechanism available for investor claims.  This choice reflects the view that class actions are alien to Europe’s legal traditions, which have long adhered to the belief that a plaintiff should not be able to bind a large number of other potential plaintiffs who have not affirmatively consented to the representation or participated in the legal process. 

ILR does not believe that it would be wise for Switzerland to depart from its traditional approach by authorizing class actions for Swiss investors.  In particular, we believe that such a course would inevitably result in significant abuse of the Swiss litigation system, the distortion of Swiss financial markets, and the imposition of massive competitive burdens on Swiss companies.