Note
The following is an extract under the title “Client Segmentation CISA”. For the sake of good order, it should also be pointed out that the following revised and translated short article is intended solely to present the factual and legal situation in 2014 at that time. For a more detailed overview, we would also like to refer to the dissertation: ” Die vermögende Privatperson als qualifizierter Anleger im Kollektivanlagenrecht”, published by Tectum Verlag in 2014.
Catalogue of classification criteria
According to Art. 10 para. 3bis CISA in conjunction with Art. 6 and 6a para. 1 CISO, a high net worth individual can be classified as an unsupervised qualified investor in two ways.
a) Proof of monetary and cognitive criterion
The condition in Art. 6(1)(a) CISO provides for two criteria: On the one hand, as a cognitive criterion, the investor must prove that he/she has the knowledge required to understand the risks of the investments on the basis of his/her personal education and professional experience or comparable experience in the financial sector; and, as a monetary criterion, the investor must confirm in writing that he/she has assets of at least CHF 500,000. In accordance with Art. 6 para. 5 CISO, the assets must be available at the time of acquisition.
According to the definition, this is therefore a monetary criterion (assets) and a first-degree cognitive criterion (personal education or professional experience). In my opinion, however, it can only be understood as a second-degree cognitive criterion if the acquisition of comparable experience in the financial sector also includes the performance of transactions to a considerable extent in the relevant market.
Prima vista, these criteria are reminiscent of the regulation in MiFID Directive Annex II. On closer inspection, however, it becomes clear that Art. 6 para. 1 lit. a CISO does not meet the European requirements – despite assurances in the embassy and parliament. The MiFID Directive requires cumulative compliance with first and second degree cognitive criteria and, as a monetary criterion, a client’s financial instruments portfolio, which by definition includes cash deposits and financial instruments with a value of at least EUR 500,000.
The cognitive element in the regulation pursuant to Art. 6 para. 1 lit. a CISO is therefore incomplete and the monetary criterion does not comply with European law.
b) Evidence of a purely monetary criterion
If the investor can confirm that he/she has assets of at least CHF 5 million at the time of acquisition (Art. 6 para. 5 CISO), this monetary criterion in accordance with Art. 6 para. 1 lit. b CISO is sufficient and the proof of a cognitive criterion is not required. It is unclear to what extent the requirements for confirmation are to be set lower than those for proof.
According to the definition, this is only a monetary criterion (assets). In the absence of the need to prove neither a first nor a second degree cognitive criterion, this declaration option is to be understood solely as a value-adjusted legacy from Art. 6 para. 1 CISO aF, since the monetary classification hurdle in aF was still CHF 2 million.
c) Written declaration
A separate article in Art. 6a CISO is dedicated to the written declaration in order to be able to provide the required proof or confirmation.
However, only paragraph 1 of Art. 6a CISO refers to Art. 10 para. 3bis of the Act. Art. 6a para. 2 CISO refers exclusively to Art. 10 para. 3ter CISA and is therefore not applicable. In my opinion, the written declaration must include written proof or confirmation (burden of proof) of the requirements stipulated in Art. 6 para. 1 CISO.
It is further unclear to which addressee the wealthy private individual must submit the declaration with the proof or confirmation. There is also a lack of concrete details on the minimum requirements for personal education or professional experience. Similarly, it would be helpful from questions of advisory liability if the investor had to confirm, by analogy with Art. 6a para. 2 lit. b CISO, that he is aware of the risks associated with the investment. Moreover, it is inappropriate for the investor to have to provide this declaration to a single financial intermediary on a case-by-case basis. It is not practicable for a high net worth individual to submit a separate written declaration (to be received) for each investment reserved for qualified investors only.
Quo vadis, compatibility with European law?
A MiFID Directive-compliant implementation of the requirements for the declaration of the high net worth individual as a non-supervised qualified investor would give investors and also financial intermediaries the opportunity to proceed according to uniform criteria in cross-border European competition for financial products or in the structuring of sales throughout Europe. Furthermore, it is recommended that the declaration not be made on a case-by-case basis, but by means of a standardised form QA and that the qualified investors thus declared be entered in a specific register QA. Analogous provisions pursuant to Art. 6a para. 2 CISO could thus be integrated on the one hand and on the other hand oblige the investor to notify the registrar of any changes in the relevant information on his own initiative. The entry in the register should only have a declaratory effect and be subject to the assignment of a unique identification number. All licensed financial service providers that include the unsupervised qualified investors as a target audience should be able to obtain clarity about the status of the investor in the course of their sales activities by means of a query in the specialized register and should be exempted from obtaining the written declaration in individual cases.
The step from utopia to reality according to Ehrenberg has not yet been taken. However, since MiFID Directive II is already on the horizon, there will be another opportunity to establish compatibility with European law in the context of a further partial revision of the CISA or a central regulation in the planned Financial Services Act (FIDLEG).
