Swiss Bank’s Inaction Exposes Clients to Abuse

A shocking case has come to light in Switzerland, where a wealthy couple was stripped of their dividends and millions were embezzled from their account by a rogue wealth adviser. The incident highlights the lack of oversight and accountability at Julius Bär bank, which failed to prevent or detect the fraud.

A Decade of Fraud

Gregory and Vera Mirlas, a wealthy Italian couple, entrusted their financial affairs to Benjamin, an independent wealth manager who had previously worked at Julius Bär. Over the course of a decade, Benjamin allegedly misappropriated millions from their account, using the funds to fund his personal lifestyle. The bank’s failure to detect or prevent this fraud has left the couple with significant financial losses.

Lack of Regulation and Oversight

The case has sparked concerns about the lack of regulation and oversight in Switzerland’s wealth management industry. The Financial Services Act (FinSA) was introduced earlier this year to improve supervision and protect clients, but critics argue that it is not enough to prevent abuses like this from happening.

• “We have seen cases where independent wealth managers are given full power of attorney by clients, and then use those powers to make reckless decisions,” said a senior lawyer who works for a private bank in Zurich.
• “It’s widespread practice in Switzerland, and it’s hard to see how the banks can be held accountable.”

The Mirlases’ Case

The Mirlases’ case is a stark reminder that even the most trusted financial institutions can fail to protect their clients. The couple has filed a complaint with FINMA, the regulator, asking it to investigate Julius Bär for breaches of compliance and facilitating money laundering.

Flawed Regulation

FINMA has not commented on the matter, but experts say that the regulator’s approach to supervision is flawed. Instead of policing compliance itself, FINMA relies on self-appointed industry bodies to monitor wealth advisers. This system is vulnerable to abuse and lacks transparency.

Conclusion

The Mirlases’ case highlights the need for greater regulation and oversight in Switzerland’s wealth management industry. Until then, clients will remain at risk of being exploited by rogue wealth managers and banks that fail to protect them.

UPDATE: Benjamin has been found guilty and sentenced to three years in prison, with 18 months suspended. He was ordered to pay the Mirlases more than CHF13 million back, as well as CHF4 million to the state.