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Geneva adviser eyes US clients with new SEC licence

Geneva adviser eyes US clients with new SEC licence

The Forum Finance Group has announced its registration as an investment adviser with the SEC, in a bid to cater to US clients.

The registration has been obtained while many asset managers across Switzerland have decided turn American clients away due to high regulatory demands.

The Geneva-based boutique made the decision to up its regulatory oversight as it saw an increasing number of its clients spending time in the US and being considered US residents.

Managing partner, Egon Vorfeld said: ‘I think that a lot of banks had a knee-jerk reaction to the enormous fines, some of which have come through after the whole banking secrecy episode and it became clear that there had been undeclared money held in Switzerland.’

The managing partner sees opportunities to attract new clients as there are many US clients who have been turned away but still want to keep their money in Switzerland.

‘A lot of people think that doing business with Americans is a much higher risk and that if you make a mistake, the consequences are a lot more severe.

‘So a lot of banks and managers have just said it's not worth taking that risk,’ he said.

Managing the risk involved with having US clients is more difficult for large companies however, and many banks that have decided to continue US business have created a specific unit for it.

Commenting on the SEC licence, Vorfeld said: ‘What they expect you to put in place is actually a good thing. It's just that you can't do it unless you have a certain critical mass.'

Complete transparency

The SEC application was made shortly after Forum Finance Group received Finma approval, which made the process smoother, according to Vorfeld.

The application, which took the Geneva boutique two weeks to gain, was focused on transparency, requiring complete information on the number of clients, assets under management and the identity of shareholders.

This was down to the SEC’s priority of ensuring all clients are treated equally and there's never any preferential treatment, said Vorfeld.  

While the application itself was cheaper than Finma’s, maintaining and complying with the processes should prove more difficult, according to the manager.

The application came as an initiative to stay ahead in the context of increasing regulation, he explains: ‘The regulatory pressures are just going to increase, the rules are going to change, expectations are going to go up.'

Swiss quality

In terms of American clients, Vorfeld said the demand for Swiss independent managers will not fall. He explains: ‘Switzerland has a long history of being a very safe, stable, solid country, providing good reporting and used to dealing with international clients.

‘It's always been the place for wealthy families to deposit their money, the natural place to go. With that comes a certain know-how that doesn't really exist in America.’

Vorfeld added that money managed out of America may be more likely to be US-dollar-centric with an American view of the world.  

It is for this reason that Swiss advisers are attractive, as he said: ‘Switzerland is one of the few places in the world where they have historically always looked after people from all over the world and always taken a global view on how to invest the money.’

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