SWITZERLAND - Five Swiss pension funds, including one for technology firm Siemens and one for pharmaceuticals firm Roche, have been named in connection with insider trading that allegedly took place ahead of a merger between two Swiss banks.
According to Switzerland's Neue Zürcher Zeitung (NZZ), the funds sold their shareholdings in Swissfirst in September 2005 - shortly before the bank announced a merger with Bellevue.
The NZZ said that following news of the merger, the Swissfirst share, which had been an underperformer, surged. By not holding onto their shares in Swissfirst, the five pension funds and two Swiss insurers lost a total of CHF20m (€12.6m), the newspaper said.
The NZZ said that meanwhile, Swissfirst chief executive Thomas Matter had made a fortune on the deal, as he was able to buy back 50% of the bank's shares in free-float, including those held by the seven investors. A separate newspaper report said that since the bank merger, the value of Matter's shareholdings had swelled to CHF80m.
Queried by IPE, Zug-based Swissfirst declined to comment on the newspaper reports.
However, the Swiss banking regulator has launched an investigation of the merger. Meanwhile, the pension funds (Pensionskassen) and the insurers are being scrutinised by their relevant regulators. The regulators are looking for any evidence of impropriety among the seven investors, including possibly acting in concert.
The pension funds being investigated include one for Siemens (CHF1.7bn in assets), one for Roche, one for industrial firm Rieter and one for supermarket chain Coop. Ist-Investmentstiftung, a CHF8.3bn pension fund targeted mainly at public employers, is the fifth scheme being examined.
Ist-Investmentstiftung also said on its website today that it had launched an internal investigation and would not have any further comment for at least two to three weeks.
The NZZ, which was initially legally barred from publishing the investors' names, quoted one Pensionskasse director as denying that his scheme was involved with any insider trading.
"If we had known about the merger before we sold our shares on September 9, 2005, we would have probably not sold them," the unnamed director told the newspaper.
He added, however, that if any evidence of wrongdoing emerged, his fund would consider suing.
The Federal law on second pillar pensions prohibits trading on insider information even if it benefits pension funds.