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Law, Financial Regulation and Compliance


This course enables participants to identify legal risks entailed with «pathological situations» in a banker’s daily business practice – may they arise in the context of private banking, wealth management or investment banking. It is not only meant to cover the contents of a banker’s “classical” Compliance manual (e.g., anti-money laundering, anti-corruption laws, insider trading & market abuse) but it also intends to raise awareness for the importance of ethical behavior and of an improved corporate culture in the banking & finance industry.

Description / Program

Chapter 1: Legal & Economic Foundations

The first chapter sets the stage with a sound, interdisciplinary introduction to financial regulation: It treats the economic fundamentals of financial regulation and explains the theoretical concept of “market failure”; real-life cases where market failures provoked new regulation (e.g. high frequency trading, complex structured products) are used to illustrate theoretical concepts. Students will be introduced to the idea of the “regulatory toolbox”, i.e. the variety of legal instruments which can be used to regulate and supervise financial institutions, such as banks, brokers or asset managers (e.g. “fit & proper test”, capital adequacy). The approach is comparative and covers several jurisdictions. An interactive discussion treats the value of regulatory competition between financial centers and it also highlights the dangers of new policy tendencies, such as neo-interventionism and neo-protectionism. The chapter concludes with an update on the most recent developments regarding the EU third country regimes – a topic of great interest in the era of BREXIT and – not least – a crucial problemn for the future of the Swiss Financial Centre.

Chapter 2: International Financial Regulation, Supervision & Enforcement

This chapter explains how the financial crisis of 2007/08 provided important lessons for a more comprehensive approach towards global financial stability: It treats the enormous efforts of International Standard Setters (e.g. G20, FSB and BCBS) to shape a new International Financial Architecture and to create new international standards for macro- & microprudential regulation. The chapter not only focuses on capital adequacy for financial institutions but it also discusses standards on IT-governance given that operational risks due to technological failures and non-resilient IT systems seem to be on the rise. To conclude, the chapter sheds some light on efforts made to ensure enhanced protection for depositors and investors in the wake of the financial crisis.

Chapter 3. Legal Risk & Compliance in Private Banking & Asset Management

This part of the course is dedicated to the rules & regulations governing asset management services offered to various segments of clients (from retail to professional). The chapter explains the duties arising from the code of conduct under EU-MiFID II & Swiss-FIDLEG and it gives a short overview on the rules governing the distribution of financial products to retail investors (EU-PRIIPs). The highly relevant topics of anti-money laundering regulation & tax compliance will be presented by a guest speaker who, in his former roles as General Counsel of the FINMA and as Responsible for Client Tax Policy at Credit Suisse, made highly relevant contributions to the current implementation of the AIA in Switzerland. To conclude, the chapter also sheds some light on sustainability and climate risk as new key factors for the future development of the private banking and asset management industry.

Chapter 4. Legal Risk & Compliance in Investment Banking & Securities Trading
The last chapter discusses legal risk and compliance issues in the areas of investment banking and securities trading. Topics which will be illustrated with real-life case studies include fraud risk in trading (rogue trader-case), conflicts of interests (creeping tender-case) as well as liability risks associated with Initial Public Offerings (IPOs; prospectus liability-case). A first in-depth discussion covers reflections on the growing importance of individual ethical behavior and an improved organizational culture in financial institutions. The second discussion will point at the controversy regarding the limits of self-regulation – a topic which gained much attention after high frequency traders had allegedly caused several technical glitches on stock exchanges worldwide (Flash Crash-case). The chapter concludes with an outlook on the challenges and opportunities of technological innovations (FinTech & RegTech), chiefly the regulatory implications of initial coin offerings («envion»-ICO-case).

Learning Method / Style of Lessons

There will be a mixture of classroom teaching and shorter break-out sessions where real life-case studies will be analyzed in small groups. Other interactive elements include discussions on current policy developments where PRO and CON arguments will be developed in class. Distinguished experts from legal practice and/or the financial industry will enrich the learning atmosphere by sharing some insights from their professional experience.

Exam Style
Depending on the number of participants, there will be either be an oral or a written exam at the end of the course. Candidates may use a set of pre-specified resources (mainly regulatory norms) and will primarily be asked to analyze cases or to discuss problem questions (e.g. PRO/CON argumentation).

Requested Material
Couse language and all course materials will be in English. Power Point Slides covering the contents of the course will be made available on iCorsi. Furthermore, specific readings materials for case studies will be assembled for each Chapter.

Participants are not required to buy a specific textbook. Reading materials will be provided on iCorsi for each Chapter.