Are Swiss Retail Investors Hostage to Swiss Broker Incompetence?

Finance, Taxes, Banking, Insurance and Retirement
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Sigh.

Back in Q1 Smithson went through a rollover. Behold the mountain of incompetence of a small broker, called TradeDirect (aka, Banque Cantonale Vaudoise) and the elaborate scheme to not fix it.

Six months later, my broker is still not allowing access to my equities. Excuses upon excuses, delays, deflections and noise. Two weeks ago I was fed up and wrote a letter to the ombudsman. All GPTs I consulted agreed “this is unacceptable and law says they should reconcile and hold enough to honour their commitments”. The articles checked out, the non-lawyer read on my side made sense. So I wrote a letter.

In July the bank/broker admitted in writing that they have LOST the equities which were sent “to the wrong third party” - I have a letter signed on proper letterhead, had to reread it a few times in disbelief.

In August I wrote to the Swiss banking ombudsman and attached the bank letter as evidence. The reply came quick and canned along the lines of “yeah, it sucks but there is no grounds for mediation, its tricky so wait”.

FINMA is notoriously opaque, so going there is as good as screaming in the woods.

Which is where I find the retail swiss investor largely screwed, as other than court, there is no recourse. Knowing lawyers here, it will likely last months, nothing will happen and when time resolves it naturally, the lawyer fees will be the haircut that eats the investment.

Sadly, InteractiveBrokers does not support Smithson, so I cannot even trigger a transfer from another broker in a final cry to salvage my position.

I feel trapped and hopeless there is anything one can do to escape the enshitification of swiss banking. This is the last position I have under Swiss broker but it pains me to not be able to interact with it (sell or move). Do you see any viable moves I might take without it costing me months of legal fees and court?

Thanks.

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That really sucks. I have never heard of such a case. Sound like a lot of negligence on the side of the bank. Did they write anything about how they will remediate their mistake?
My interpretation of the answer of the ombudsman is that BCV acknowledged a mistake but has not yet proposed a solution (which you could have rejected), so there’s nothing to mediate at this point.

Are there no other (Swiss) brokers such as Saxo or Swissquote that support Smithson?

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It reinforces the point that it might be better to go for a large broker that has excellent operational capabilities over the fuzzy warm feeling people seem to get from going with a Swiss branded service.

And say what you want about the American system, but when things go wrong, you get paid out quickly.

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My experience is that for large sums best in class is far more important than lower fees as the impact of mistakes is disproportionate.

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I don’t understand your point. Large broker and Swiss branded service is not mutually exclusive.

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Swiss branded service is overrated. Just because it is very very very expensive does not mean it is good.

The shares held by your broker are your belonging, if they don’t give it back you can do civil and criminal prosecution. Civil prosecution is easy, done with “Betreibung”. I would do criminal prosecution first, they did steal your shares.

Now I am no lawyer and I doubt you will find a free one on the Internet. Try your legal insurance, if you have none just denounce the stealing of your property at the police, later do a Betreibung to the broker. Will cost you a few bucks but is probably worth it.

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Would you accept monetary compensation e.g. value at supposed time of delivery? That way maybe the betreibung is more of an option. Just my impression. I am no expert.

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There are no large Swiss brokers that I am aware of. The biggest name I think of is Swissquote which according to google has only around 88 bn of client assets.

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Smithson are reclaimed against the NAV end of day - there is no way of reasonably “anticipating” to propose monetary compensation. Also, I would like my freedom back, to hold, sell or buy. As you said - this is my property!
Criminal filing at the police - I think this might be a stretch; the equities are on record, I have a confirmation in writing. They are even listed in my account now - but are not tradable. So, TradeDirect is not disputing the ownership - just blocking the ability to exercise it, as they have not backoffice reconciled properly. In six months. MADNESS.

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What about UBS?

I don’t see a correlation or causation between size and customer service.

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The best customer service is the one you never need. Speak IB…

But seriously speaking, the FINMA regulates brokers in Switzerland. Shares they hold are your property, if they do not have them anymore that is just theft and I think there is no insurance covering that. The broker has a debt in form of the lost shares to the client, but if he goes bankrupt after losing the shares maybe the client is left with nothing but a learning experience. However, if the broker goes bankrupt before losing the shares you may have a chance to get them back, because those stocks are special separated assets that do not go into the pool of funds to be deployed to the creditors.

Serious brokers have an insurance against fraud, whoever commits it.

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I understand. I would actually close the account entirely and state that you won’t accept partial closing and move money elsewhere. That may trigger them to do something. And I would not trust them anyway.I fear at the moment they are considering this situation a temporary problem you can absorb.

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I guess your options are to wait or take legal action. If they admitted to losing it, then maybe ask them to compensate you? Or write letters weekly asking them to provide a timeline of what exactly they have done to recover the amounts. Give them 7 days to respond. Ask again weekly.

After Synapse collapse the mess was never resolved, AFAIK, but that was a mess where someone thought it was good to co-mingle assets from 4 different banks. Your case sounds simpler, but it isn’t clear what happened, where they always owned by the same broker? Or did you transfer to/from them?

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I am not sure anyone understands what happened, as there are too much opacity Eg you say they admitted they lost the equities, but at the same time you have written confirmation that they are on record yours.

Perhaps you have to arrange a meeting and talk to someone at BCV, to explain to you why you cannot trade online and when it would be resolved? There may be other reasons beyond the smithson issue. You can always give instructions on paper in person, if you wish to transfer the investment, and close the account.

To go to ombudsman you need to have a conflict or something concrete against their terms and conditions. Although unfortunate, there may be cases where such delays are possible if sending shares by post or if Smithson didn’t do their part right during their restructuring.

I don’t trust GPTs for something like that, they always respond with what they think you want to hear, and when you correct them they tell you the opposite.

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The real question is who messed up and who takes responsibility. I don’t think the bank provided a real answer. “Somehow it got lost” is a sign of avoiding accountability in general and it rarely inspires confidence.

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I guess it is like when you give your cloak to the cloak room and they give you a token. You bring it back and they say “ah yes, we do have a record of your coat but we’ve lost it. maybe we gave it to somebody else. hold on.”

(6 months later) “phew, maybe he’s forgotton about that coat”