The Swiss firm said it "strongly refutes" allegations about its two products and its reporting of transactions linked to them. It said there had been internal and external probes of the case, which failed to produce evidence to back up suspicions raised.

Structured products fintech firm Leonteq has hit back at claims in a recent media report alleging suspicious trading potentially related to tax evasion or money laundering by clients linked to Leonteq-issued products distributed by a firm based in the British Virgin Islands. Leonteq’s shares have slumped by almost 24 per cent since last Friday.

On Monday this week, the Financial Times reported that whistleblowers had accused auditor EY of whitewashing suspicious trades, including money laundering and tax evasion in an investigation it conducted this year for Leonteq, a long-standing client.

Leonteq created two trades for French workers' co-operative society ID Formation at the start of 2021, the FT reported.

Shares in Leonteq fell sharply and continued to lose ground on Tuesday. Since Friday, they have sunk more than 24 per cent. Yesterday, the shares were up slightly on the day.

Leonteq, which is listed on the SIX exchange, noted that the 10 October article contained allegations made concerning two Leonteq issued products, “vaguely referring to potential tax evasion or money laundering by third parties.”

“The assertion was made that Leonteq should have reported those transactions to the relevant authorities and that a special investigation conducted into this matter was not sufficiently independent. Leonteq strongly refutes these allegations, which were first raised internally in 2021 and were thoroughly investigated by Leonteq’s compliance department. This investigation found no evidence that would corroborate the suspicions raised,” the firm, which is based in Switzerland, said in an emailed statement to WealthBriefing and other media yesterday. 

Leonteq said that in addition to the internal probe, Leonteq’s board of directors mandated an independent EY team to carry out a special investigation. 

“The decision to commission EY was taken against the background of Leonteq’s then ongoing tender process to renew its external audit mandate, replacing PricewaterhouseCoopers, in order not to conflict accountancy firms participating in the tender process (including Deloitte later elected as external auditor by shareholders). EY, as Leonteq’s internal auditor, did not participate in the tender, and the separate EY team performing the special investigation was operating autonomously,” Leonteq said.

The EY investigation confirmed that “with respect to all relevant trades, no indication exists that would justify the allegations of money laundering or tax evasion,” the Leonteq statement said. Also, internal and external legal and compliance specialists concluded that there was no basis upon which the filing of a Suspicious Activity Report (SAR) would be warranted, it continued.

The firm said its distribution partners are third-party financial intermediaries who must comply with laws and regulations applicable to their business, including anti-money laundering rules, as well as the distribution agreements agreed with Leonteq. “If Leonteq detects a breach thereof, it takes immediate appropriate action, while the distribution partners remain responsible for their adherence to applicable requirements,” it said.

Separately, the firm said that it continued to maintain a “prudent approach to risk management.” Its trading performance has compensated for subdued client demand in the second half of the year to date. Leonteq said it is “on track” to meet its previously-announced guidance of beating the prior year’s record group net profit of SFr155.7 million ($156.4 million) for the full-year 2022.