Facts
The X. AG and its subsidiaries, active in the financial sector, distributed five standard investment contracts, with accounts and deposits in the name of the respective subsidiaries, and sometimes guaranteed a return to clients. On 11 October 1996, the Federal Banking Commission (CFB) informed X. AG that this practice was no longer authorized since the entry into force of Article 1, paragraph 2, of the Federal Law on Banks and Savings Banks (BankA) on 1 February 1995. X. AG confirmed on 26 June 1997 that no return guarantee existed or that the invested funds had been reimbursed.
On 22 December 1998, the CFB met with the management of X. AG and found that the products offered by X. AG's subsidiaries qualified them as securities brokers within the meaning of Article 3, paragraph 5, of the Ordinance of 2 December 1996 on Stock Exchanges and Securities Trading (SESTA). The CFB prohibited X. AG from recruiting new clients or concluding new investment contracts and required existing clients to make no further payments.
On 14 December 1999, the President of the CFB appointed an observer to verify X. AG's activity and ordered X. AG to provide access to all necessary information and documents. X. AG contested this decision before the Federal Court.
Considerations
The Federal Court examined the CFB's decision and found that the appointment of an observer was justified, as X. AG had provided incomplete and contradictory information about its activity. The Federal Court also found that the CFB had the power to appoint an observer to verify if an activity was subject to banking or stock exchange authorization.
However, the Federal Court annulled points 3 and 4 of the CFB's decision, which authorized the observer to…