Wife of Swiss National Bank chief suspected of insider trading

One day before Christmas Eve the Bank Council of the Swiss National Bank (SNB) surprised the public with a cryptic message: rumors were investigated, according to which Philip Hildebrands wife Kashya commited insider trading in the foreign exchange. Specifically she had done two transactions, the three weeks before the pegging of the Swiss franc to the euro on September 6. The Board - the Board of supervisors of the SNB - have these transactions at the request of the SNB President as well as all movements of the Hildebrand family retrospectively examine can be. The findings: Hildebrand did not do anything wrong.
At this press release, a lot was puzzling. In particular, it remained unclear why the Bank Council denied a rumor, which actually nobody had heard of something. At the time of the publication of Communiques, not a single journalist at least had knowledge of allegedly problematic foreign exchange transactions in the House of the SNB President. On what rumors referring the Bank Council specifically? And where they circulated?
New edition of the campaign
Now, the fog will scan: evidently Christoph Blocher [necon-type billionaire politician] plays a central role in this affair, as is to learn from the environment of the Bank Council. He has played to namely woman the confidential information on the transactions of Hildebrand get. Blocher contacted President Micheline Calmy-Rey to the December 15 and based on these suspicions. In a further meeting, he presented her the documents. The President consulted on Finance Minister Eveline Widmer-Schlumpf. André Simonazzi, Federal Council spokesperson, confirmed that the President had received information in December. It is not at the waist, to name a few involved persons.
Then, the two Bundesrätinnen [members of the executive government] confronted Hildebrand with the Insider charges. This responded immediately: He gave the power of Attorney of all its finances, a neutral person. They then allowed a double review of all accounts of the family: by the head of the Federal financial control and the book screen experts at PricewaterhouseCoopers (PwC). Within a week, these investigations had been completed and submitted to the Governing Council. It discussed the results within the framework of a special meeting on Thursday, 22 December, and was then unanimously confidence Hildebrand. The public took place only after the Federal Council in the context of its meeting had taken note and approved the media release on 23 December by the decision of the Bank Council. Previously, the Federal Council Hildebrand and Hansueli Raggenbass, President of the Bank Council, had personally listened to.
Information needs of the Federal Government explains
The decision to inform the public about not in fact known rumors, becomes plausible in this context: with Christoph Blocher as interface receives the whole insiders campaign against Hildebrand a political touch. As you know, Blocher via «World week» [big newspaper] had tried for months to lift the SNB head from the saddle. First, the rapid rise of the Swiss franc forced the SVP [Blocher´s political party, neocons] strategists to a spectacular zig zag. Obviously, the Federal Council [executive branch of the federal government] last week decided to go into the offensive with its information policy by considering that a new edition of a campaign against Hildebrand was on the horizon. They were aware that continued attacks on Hildebrand could have disastrous consequences for the Swiss franc exchange rate.
The fear of a new edition of this campaign is not from nowhere. Than hours two before (!) was released on Friday the communiqué of the Bank Council, enough SVP National Councillor Hans Kaufmann an interpellation a titled «SNB and Swiss Stock Exchange Act». He founded the "NZZ am Sonntag» his motion that he had heard earlier rumours according to which national bank employees have information about upcoming market intervention and foreign exchange transactions to be made. These rumours seem to circulate in SVP-related circles. Last Saturday the «Aargauer Zeitung» [newspaper] cited a a Zurich banker: «the rate fluctuations just before the intervention stink to heaven.» Various SMEs were also selectively supplied with informations in advance.
Account at Sarasin [Swiss private bank]
How the documents of the private accounts of Kashya Hildebrand came into possession of Blocher, is unclear. However, it is clear that the information be of a such level of detail, that they only illegally can be been procured. Who gave this information, has guilty likely violation of banking secrecy.
The account in question was located at Bank Sarasin. It was sold recently to the Safra group. In advance, the buyers were given the opportunity of an in-depth examination of the Sarasin books. It is conceivable that the confidential information in this regard in the hands came third. It is clear that none of the big banks are involved. These had been fighting with Mr Hildebrand over the "Too big to fail" laws [new banking regulations] in the past. Therefore it has been speculated temporarily the action was an act of revenge of the Bahnhofstrasse [two big banks: UBS and Credit Suisse].
As a whole, the story raises the presumption, it was with the affair to a politically motivated exercise to the destabilize the SNB President. The fact the suspicions are as little sound, the following fact: the profit potential that beckons Hildebrand from the two transactions, shall be according to the "NZZ on Sunday» to a medium-sized five-digit amount. For this, no central banker in the world risks his job.

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I love a stink
My kind of story in the Swiss papers today. I love it when big shot central bankers get their dirty laundry made public.
Kashya, the wife of Phillip Hilldebrand (head of the Swiss National Bank) sold Swiss Francs just a few days before the Swiss National Bank initiated exchange controls and devalued the Franc. The timing of the transactions was nearly perfect. The suggestion is that “pillow talk” between husband and wife lead to the trades.
Don’t expect heads to roll over this transgression. There has been a complete review by Swiss authorities and the conclusion is that there were no insider trading violations by the wife.
That’s not to say that trades did not happen.
Apparently, Kashya Hildebrand bought ~$500,000 when she shorted the CHF. This relatively small transaction netted the Hildebrand family only ~$50,000 in less than one month. Being that the amount is so small, the conclusion is that nothing nefarious has taken place. From NZZ.
Therefore no central banker in the world would risk his job.
Really? Only $50k extra for the wife’s account? That’s not enough incentive? I guess so. Hubby earns CHF 862,000 ($950,00) at the SNB. (A sweet deal, Ben Bernanke takes in less than $200k)
What's fascinating about this story is how it came about. Who blew the whistle on wifey?The answer is that Kashya Hildebrand maintained an account with a (very) private bank called Sarasin. When she did the trades back in August someone at the bank alerted an opposition politician, Christoph Blocher. Blocher brought the evidence to the Swiss President, Micheline Calymy-Rey and insisted on an investigation.
The information was leaked by a bank employee? To a politician? Folks, this stuff is not supposed to happen in Switzerland. This is the land of banking secrecy. This leak is highly illegal. This affair proves one point. There is no secrecy left in Swiss banking (for residents and non-residents alike). Anyone who thinks there is, is just wrong.
It’s not possible to know the facts in this story. It’s been whitewashed. There are a number of possible scenarios. I wish I knew which one was right:
-Philipp Hildebrand never told his wife about the pending exchange controls and devaluation of the CHF.
-Kashya Hildebrand acted independently; she never informed her husband of the transactions she made with the family’s money (she also bought dollars and sold CHF for her daughter).
-Kashya Hildebrand routinely bought and sold dollars. The timing of the transactions (August 15th) was pure coincidence.
-No other employees of the SNB (or their family members) sold Swiss Francs in advance of the devaluation.
-ALL OTHERS.....
This story stinks. It’s about political intrigue, stolen information from secret banks, leaked information from Central Banks and possible insider currency trading. A nice way to kick off the New Year!

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dereksatkinson said:

The Swiss banks became prominent mostly because of all the Jewish savings they stole during the holocaust. As much as I'd like to say it was from free market principles, it was mostly from being opportunistic and underhanded. They have no moral high ground.

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I wrote about Kashya Hildebrand’s inappropriate FX trades the other day. The story has some new legs today (Bloomberg). The wife of the president of the Swiss National Bank (SNB) has done the one thing she never should have. She talked. Any chance this affair had of falling off the radar screen was lost when she went on Swiss TV.

A recap:

-8/15/11 Kashya sells CHF 400,000 short against the dollar at USDCHF .7936.

-9/9/11 the SNB devalues the CHF.

-10/4/11 Kashya covers the short and earns an FX profit of CHF 75,000 ($83,000). The return is 16.5% of the amount traded. She did this in just 50 days (120% annualized).

-November 2011 an employee of Sarasin Bank, Basel steals the information about Kashya’s trades and leaks it to a Swiss politician, Christoph Blocher.

-There is a formal investigation. On Friday night, 12/23/11, the SNB makes a public announcement that the FX transactions have been reviewed and there is nothing improper about them. The timing of the release of information was clearly an effort to bury the story.

-1/3/2012 Kashya goes on TV in what appears to me like a snotty and inappropriate defense of her actions.

Kashya’s words:

“My interest in the dollar purchase was motivated by the fact that it was at a record low and almost ridiculously cheap.”

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I think this is bullshit. Yes the dollar was cheap at the time. There was a global panic occurring. To counter-trade the market at precisely the time the CHF was hitting all-time highs takes balls and an extraordinary sense of timing.

Kashya may have committed a fatal error with those words. She teed this up. Now there has to be a follow up. I’ve been trading FX for years. There is no way in hell that Kashya just happened to luck out. There is only one possible exception. If she was a regular trader of the USDCHF, she might be able to justify the impeccable results of the 8/15 trades. But if she can’t demonstrate that she was a repeat "banger" in the FX markets, then the idea that she just happened to think the CHF was “cheap” and was worthy of a spec, falls very, very flat.

It is a fact that 70 to 80 percent of the financial transactions of the Gallery are in dollars. The reason is that the artists come from many different ethnic groups, and that we participate in many art fairs around the world.

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Kashya is attempting to argue that her FX trading is directly related to her art gallery business. Oh really? If that were the case, this story would never have made the headlines. If she had purchased a specific painting that was priced in dollars it could be argued that the transaction was in the normal course of her business. Importers hedge their FX exposures all the time. That’s not what happened here.

There was no painting that was being hedged. If there were, Kashya would have shown an invoice long ago. This was an outright speculation on her part. The proof is that she never took delivery of the dollars she bought. When she had a big unrealized gain, she did what any smart spec would do, take the profit.
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