Facts

The complainant 1 ([A.] ) was the sole member of the board of directors and majority shareholder of [G. AG] , which acted as an intermediary for private equity investments. Together with [H.] (respondent 3), he managed the company’s affairs, which from 2008 onwards exclusively brokered shares in [I. AG] . The brokerage activity was conducted without the required FINMASA licence and involved deceiving investors about the company valuation, the shareholding structure of [I. AG] , the availability of the shares and the amount of the commissions. Between 2008 and 2016, at least 203 investors were recruited who entered into participation agreements for a total of 8,214,209 shares worth at least EUR 72,495,656.--. [G. AG] received commissions averaging 23.8 % of the investment amounts. The company was part of a group structure with [J.] Ltd., [L.] Corp. and [M. AG] /GmbH, which were connected through personal, organisational and economic ties.

On 15 August 2019, the Zurich District Court convicted [A.] and [H.] of conducting business without a licence under Art. 44 para. 1 FINMASA and multiple breaches of the UCA. [A.] was sentenced to a partially suspended custodial sentence of 27 months, and [H.] to a suspended custodial sentence of 24 months. In addition, confiscation orders were issued for assets and restitution claims of CHF 2.7 million ([A.] ) and CHF 1.7 million ([H.] ) respectively. The Zurich Cantonal High Court largely upheld the judgment, reduced [A.] ’s custodial sentence to 24 months and referred the private claimants’ damages claims to the civil courts. [A.] and several private claimants appealed against this judgment to the Federal Supreme Court.

Considerations

1. Admissibility of the appeals The Federal Supreme Court examined the admissibility of the criminal appeals under Art. 81 FSCA. Complainants 2–6 had participated in the cantonal proceedings as private claimants and had a legally protected interest in the annulment of the referral of their damages claims to the civil courts. Complainant 1 was also entitled to appeal as he was aggrieved by the contested measures. The appeals were deemed admissible.

2. Confiscation of assets Complainant 1 argued that the lower court had not sufficiently examined the causal link between the criminal offences and the confiscated assets. The Federal Supreme Court confirmed that natural causation is required for confiscation under Art. 70 para. 1 SCC, but that this need not be direct and immediate. It is sufficient if the assets were obtained indirectly from the criminal offence or constitute substitutes. However, the lower court must examine whether the inflows of assets would also have occurred in lawful alternative conduct. As the lower court had not conducted this examination sufficiently, the judgment was set aside in this respect and the matter was referred back for reassessment. It was emphasised that the standard of proof of the balance of probabilities applies, particularly where there are numerous victims.

3. Restitution claim The restitution claim under Art. 71 SCC is subsidiary to confiscation and subject to the same requirements. Complainant 1 argued that the restitution claim of CHF 2.7 million impeded his reintegration. The Federal Supreme Court confirmed that the lower court had not sufficiently taken into account complainant 1’s financial situation. Although the trial court has a wide margin of discretion, all material aspects, in particular the debt situation, must be considered in the assessment. As this had not been done, the restitution claim was also set aside and the matter referred back for reassessment.

4. Referral of civil claims to the civil courts Complainants 2–6…