From August 2010 onwards, the bank’s shares came under increasing selling pressure and the FINMA concluded that Valiant absorbed this pressure by strategically purchasing substantial quantities of its own shares and adding them to its own holdings. “The volume of purchases was geared to the price at the time, and was designed to prevent a further fall in the market price which would have triggered additional sales,” the FINMA said.
“As a result of the share purchases by Valiant, the share price bucked the general market trend until mid-October 2010 and declined only slightly, indicating that it was being artificially propped up,” the regulator said.
The selling pressure constantly increased until Valiant was no longer able to absorb it by purchasing shares and it resulted in the share price falling 22 per cent between 18 and 21 October 2010.
The FINMA said that Valiant “seriously violated its duty to ensure proper business conduct and its organisational requirements when conducting its proprietary trading”. It was recognised, however, that Valiant took measures to remedy the organisational shortcomings that had been identified during the proceedings which started early last year.