Inquiry gives SNB board members clean bill of health over personal dealing
The Swiss National Bank has found that the trading by members of its enlarged board of governors and their families did not breach its regulations, a result it will hope draws a line under the trading scandal that has engulfed the central bank.
The move could clear the way for Thomas Jordan, acting chairman of the central bank, to take over the role on a permanent basis. Jordan stood into the breach after the departure in January of Philipp Hildebrand, who resigned as chairman as a result of the scandal that surrounded the FX dealing of his wife Kashya Hildebrand.
The appointment of Jordan, who has an academic background and joined the SNB in 1997, will be seen as a break from the regime of Hildebrand, who worked for hedge funds in London and New York before taking a role with the central bank.
Kashya netted SFr60,000 on a long USDCHF trade thanks to her husband’s decision to introduce a SFr1.20floor in EURCHF in September.
As a result, the SNB instructed auditors KPMG to review the own-account transactions by members of its enlarged governing board between January 1, 2009, and December 31, 2011.
Since the resignation of Hildebrand, the members of the enlarged governing board comprise Jordan, Jean-Pierre Danthine, member of the governing board, and the three alternate members of the governing board: Thomas Moser, Thomas Wiedmer and Dewet Moser.
The financial transactions of Hildebrand were also reviewed, although those of his wife were not re-examined.
KPMG concluded that, during the course of the analysis presented in the report, no activities were identified that might suggest that financial transactions by members of the enlarged governing board “were in breach of the guidelines and regulations in place during the period under review”.
None of the transactions by Jordan, Moser or Moser required further analysis, KPMG said.
However, KPMG did conduct a detailed analysis of six transactions, two each by Hildebrand, Danthine and Wiedmer.
Hildebrand sold a total of €856,465 against the Swiss franc in March and June 2009, but neither deal occurred when the SNB was intervening in the market.
However, the SNB was active in the market when Danthine and Wiedmer traded.
On February 15, 2010, Danthine sold €197,674 against the Swiss franc to pay money into his pension fund. On May 2010, he sold €126,000 against the Swiss franc after his investment adviser recommended he reduce his exposure to the eurozone.
Wiedmer’s trades were in equities. On March 8, 2010, he bought SFr4,162.95, which he sold on April 6 of the same year for SFr3,772.30 francs, violating the central bank’s six-month holding period for passive management. On September 9, 2011, he bought shares for SFr1,769.45, which he sold on November 11 for SFr644.50 francs.
Wiedmer “was of the opinion that the minimum holding period did not apply to loss minimization”, the report said.
The SNB said: “The Bank Council has concluded that Jean-Pierre Danthine as well as Thomas Wiedmer cannot be reproached for any misconduct and that they did not take advantage of confidential or privileged information. It continues to have full confidence in Jean-Pierre Danthine and Thomas Wiedmer, as well as the other members of the enlarged governing board.”
The SNB added that in light of recent events, its regulations must be made more stringent and monitoring intensified, and that new regulations would be published shortly.
In addition, it said it hoped to appoint a new governing board member within the next few weeks.