Hildebrand Affair - Bad All Around

ilene's picture

Following up on Bruce Krasting's Kashya Hildebrand Speaks – Sinks Hubby? 


Hildebrand Affair - Bad All Around


By Ilene 

Recall: Philipp Hildebrand, chief of the Swiss National Bank, denied wrongdoing on Thursday and claimed he had no intention of resigning over the trades. According to Mr. Hildebrand, his former currency trader wife wasn't aware of the Swiss central bank's plans. (SNB chief denies wrongdoing over dollar deals) As Frank Jordans reported,

...Philipp Hildebrand said had acted according to the central bank's internal rules in the U.S. dollar swaps, which came as he was spearheading efforts to lower the value of the Swiss franc.

"I am not aware of having committed any legal error," Hildebrand told reporters at the SNB's headquarters in Zurich. "But I understand that the public is also asking moral questions."


Hildebrand said he understood that the dollar deals totaling more than $2 million — some of which he said were conducted by his wife — could be misinterpreted and damage his reputation. But he insisted that he would stay on as president as long as he had the support of the SNB's board and Swiss authorities


Hildebrand told reporters Thursday that his wife wasn't aware that the central bank would two days later increase the liquidity of the franc, thereby lifting the value of the dollar.

Full article: SNB chief denies wrongdoing over dollar deals  | ajc.com.

Hildebrand insisted he did nothing wrong, but understands why his actions could be "misinterpreted." Apparently, the correct interpretation is that Hildebrand's wife knew nothing, and there should be no presumption otherwise.

The real take home message is a repeat - laws and rules of ethics only apply to some people.

Like who? The Sarasin bank's IT support employee for one. In discovering the trades, he violated Hildebrand's right to secretly conduct currency trades from his private account  broke the laws of Switzerland. The people he gave the information to may have also broken the law. Hildebrand didn't let the travesty go unnoticed, and he "lashed out" at those who leaked details of his and/or his wife's trades. The employee who stole the information has been fired, and Hildebrand is consulting his attorneys about pursuing additional legal action. According to the NY Times:

While expressing regrets, Mr. Hildebrand portrayed the accusation of insider trading as the work of his enemies on the Swiss political right... “The personal attacks against me have reached the point where I had to defend myself,” Mr. Hildebrand said.

An information technology worker at Bank Sarasin faces a criminal investigation for allegedly giving the information to the Swiss People’s Party, whose most visible leader, Christoph Blocher, has been a bitter critic of Mr. Hildebrand...

Bank Sarasin said Tuesday that it had fired the employee, who had turned himself in to the police in Zurich. The charges carry a maximum sentence of three years in prison.

Exposure to criminal charges should have a chilling effect on anyone who has any thoughts of revealing insider trades from private bank accounts in the future. No worries, because according to the WSJ, "In his first public remarks since the affair broke in late December, Mr. Hildebrand disclosed proposals to increase transparency in financial transactions by top SNB officials."  Good idea. The conflict between laws protecting privacy and laws against insider trading could be largely eliminated by real transparency.

More details from the WSJ (Swiss Banker Says He Won't Resign, Official Denies Advance Knowledge of Wife's Dollar Trade):

Mr. Hildebrand said he only learned of the purchase the day after it was made, but on Thursday said he wasn't "totally surprised," because Ms. Hildebrand had "talked about how low the dollar is and that we should buy more dollars....What I blame myself for is not either reversing the transaction or not telling her not to discuss this."... ["not telling her not to discuss this"??]

Meanwhile Thursday, Zurich's state prosecutor said it has opened a criminal investigation into a former Bank Sarasin & Cie AG employee who is alleged to have passed on Hildebrand family currency-transaction details to the Swiss People's Party, which has been highly critical of the central banker. The leak, which would be a breach of Swiss banking regulations, paved the way for the controversy last December.

While the SNB acts independently of government, its president is elected by the government's Cabinet members. The seven-member Cabinet can remove Mr. Hildebrand if requested to by the central bank's supervisory council. In "Swiss right presses central bank chief to resign," Frank Jordans reported,

Lawmaker Christoph Blocher has demanded a parliamentary inquiry into the whole affair.

The billionaire businessman, who first brought leaked statements of Hildebrand's dollar deals to the attention of the government, said he expected further questionable transactions to surface in a probe.


Without naming Blocher, Hildebrand told reporters Thursday that those now engaged in "attacks on me as an individual" were harming the interests of Switzerland...

Zurich prosecutors said Friday they have opened an investigation into a possible breach of banking secrecy by a former Sarasin employee.

The bank said Friday it was also seeking a criminal probe against those who encouraged the unnamed employee and received copies of Hildebrand's confidential documents. (Swiss right presses central bank chief to resign)

These events bring up many questions regarding not only the actions of Mr. Hildebrand and insider trading laws, but also regarding an individual's right to privacy and the public's interest in not discouraging bank employees from revealing private information when it involves potentially illegal activity.  Bruce kindly answered my questions on the latter in red.

1) How far should a right of (bank account) privacy extend to protect public figures from exposure of questionable transactions? ZERO. 

More generally, how should the right of privacy be balanced against the public’s right to know of illegal and/or unethical activity? I think there should be full disclosure of financial transactions for elected officials and non elected ones in important positions.

2) What are the details of Sarasin bank’s employee finding the trades? He was an IT guy. Not a senior person.

Did he break the law, break only bank regulations, or did he discover the trades through his normal activities? Totally, totally broke the laws of Switzerland. He turned himself into the police. 

Would there be a criminal probe into the employee’s conduct if he went straight to the police? Yes. He broke the laws of Switzerland (by getting the information in the first place).

3) What is the basis of the criminal probe directed at "those who encouraged the unnamed employee" to give them confidential documents? 

This is the question of the hour. Which way was it?

(a) An IT guys sees something. He understands what it is and makes a copy of it. Later (through an intermediary), he contacts Blocher who, in turn, takes it to Calmy Rey.

(b) Blocher hires an intermediary and instructs him to get records of Hildebrand's accounts. So an IT guy regularly reviews the account looking for dirt. Bingo! one day he finds it.

I think it was (a); the crime would be (b).


[Picture credit: William Banzai]

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Fix It Again Timmy's picture

What well-connected people do NOT make money as a result of being in the inner circles?

lotsoffun's picture

comes with the job. we civilians aren't allowed to do that, but that's why hopefully we join together so it ends.

if i leave work at mcdonalds at 20:00 (8 p.m.) do i get a car ride home? if i leave work at GS a 20:00??

denny69's picture

Surprised they responded to the accusations at all. Der Frau and her menchie husband usually respond with the middle finger.

ilene's picture

The bank's responding, hopefully seriously. Check out: 


The council of the Swiss central bank today said it will overhaul the internal rules governing transactions with financial instruments by the six members of the Enlarged Governing Board of the Swiss National Bank.

In addition, all bank transactions by all members of the Enlarged Governing Board from Jan. 1, 2009 until Dec. 31, 2011 will be examined by an external auditor, the Bank Council said in an e-mailed statement today.

JustACitizen's picture

Moral people are always taken advantage of - by the immoral.

Does anyone remember a time in which a public official/officer of the court/executive officer/etc. would avoid impropriety - or even the appearence of impropriety.

Nowadays, the scum just bleat out: "Well, it's not illegal". As if we as a civilized society need to write a law for every single contigency the mind of man can dream up.

Anyone can think up ways to enrich themselves unlawfully at the expense of the commons - it is precisely in practicing self-restraint on ourselves that we can say that we are worthy...

Dirtt's picture

We have laws.  We have regulators.  We have regulations.

What's the point if we have no enforcement?

Bananamerican's picture


in the meantime, oligarchs bleat and propagandize about REGYOOLAYSHUNS to the proles while placing their moles at the head of regulating agencies and bribing Congress to create "legal" loopholes for their bloodsucking crimes...

"Every society gets the kind of criminal it deserves. What is also true is that every community gets the kind of law enforcement it insists on."
             John F. Kennedy 1917-1963, Thirty-fifth President of the USA

ilene's picture

Does anyone remember a time in which a public official/officer of the court/executive officer/etc. would avoid impropriety - or even the appearence of impropriety.

That it wasn't so long ago. I was almost prompted to respond to another comment in here to say that that central bank employees and their families should not be trading currencies at all for that very reason - appearances. (There are plenty of other reasons, but this is simple.)  Here, with stocks, there are rules by the SEC that bypass the need to know if the insider "knew" the information - e.g. setting time limits on how long the trade had be held to not be considered an insider trade - so it doesn't always come down to proving knowledge if the insider is clearly an insider. I don't understand why these rules or similar ones do not apply to trading entities that are not securities (or securities based swap agreements? - or something like that).  I was trying to figure it out but ended up confused and tired. 

lotsoffun's picture

ilene - there is an even more moral and magnamious reason that for example, central bankers shouldn't be trading currencys.  it's the reason the 1776 congress structured things the way they did.  it was assumed that only RICH (and hopefully educated people) would be in the federal government, as such it would be an HONOR and an OBLIGATION to society.  and since they were well to do people - it would change the system of rule from kingdoms where the king was simply trying to enrich himself.  and it was an attempt in our new democracy to avoid people abusing power by simply getting themselves into office.  personally, i don't think rules even need to be applied.  people like the hildebrands have more than most people can ever dream of.  and yet, they need more.

there was no pillow talk - 'honey - i don't think that will really look good, i don't think we really need to make more money'.  never happened.  what happened instead was  'i guess we can get away with it' - and then 'it's not actually against the law'.  real class.

greed has conquered all of them. 

ConfederateH's picture

I work for a Swiss bank in IT, and it is very unlikely that an IT grunt had access to any of this information, I guess you can thank Sarbane Oxely for that.  If Sarasin doesn't have any US businesses and doesn't have to follow Sarbox, even then access to production data including client identifying information is very segregated.  Far more likely it was some kind of business analyst not directly in IT or a non-IT employee, maybe wealth advisor.

lotsoffun's picture

confederateH - you may not have access to that but many people in IT do.  there is a daily list of trades done by whom, with whom and in what security to how much amount (to settle when, etc. etc.)  and each client gets some sort of electronic or paper statement of their trades.  if in swiss the trades are done by account numbers and not names, doesn't make a difference, that can,has and will be cross referenced.  how silly.



Downtoolong's picture

As with so many examples like this case that we have seen over the last four years, it boils down to one of two sorry truths. Either:

1)      She’s a crook

2)      She’s one of the biggest idiots on earth

The best Hildebrand can hope for is that we lowly citizens settle for option 2, which is entirely inconsistent with the high esteem and prestige some continue to feign on her.

vegas's picture

This has been going on for so long it isn't even news anymore. The world can bitch and scream all it wants, but since the beginning of trading in the 1970's, every politician, government apparatchik, and CME exchange official has given "inside" info to wives-girlfriends-mistresses and hedge fund trolls on a regular basis.

She netted 83K; whoop-de-whoop. What about George Soros and his "inside" currency caper in 1992? That asshat came away with a few BILLION after having had inside info from the Exchequer at BOE. Without that trade, he's just another fat, stupid liberal with empty pockets.

Sure it stinks to high heaven, but in forex there are no rules; no insider trading laws or anything of the sort. Morally bankrupt? Hell yes. Illegal? Nope.



blindman's picture

speaking of number nine and insider trading check this ...
9/11/2001 insider trading
Friday January 6 9:01am
59 min
first voices indigenous radio
Thursday January 5 9:01am
59 min
Public Affairs

DavidC's picture

I don't know what all the fuss is about. Insider trading is legal for Congress in the US.

Just on case you're wondering...sarcasm off...


pine_marten's picture

Number nine, number nine, number nine........

etresoi's picture

Nonesense !  So Kashya H. made $50,000 on a $500,000 play over two months.  This is not criminal, it is minimal.  Of course it is much more than one can earn by following the advice of Ilene's employer, for which fools are happy to pay.

I earned $600,000 on selling euros on Thursday and Friday, getting out on Friday before Americans got out of bed.  Does this make me criminal?

ebworthen's picture

Are you a public servant?

Are you using client money from non-segregated accounts?

Are you benefiting from inside information that puts others at a disadvantage?

If not, and you are gambling with your own money, you are no different than people at the slots in Vegas.

If the above are true, you should be put in a cold jail cell with no windows for a long time - or hung from the nearest lamp post by a mob.

etresoi's picture

No, I am not a public servant.  I am a retired businessman, who finds it necesary to protect his estate from the idotic policies of european 'public servants.'

I do not gamble and when one sees the euro devalueing 1.35% in one day(as it did on Thursday), one would be an idiot not to protect oneself.

For the math deficient, that is equivalent to 500% annual inflation.

ebworthen's picture

Then I say have at it, and do what you can with your own money to protect your savings, and more power to you.

I see parity with the dollar in the next year, so hedge accordingly.

zhandax's picture

OK, to cut through all this cutesie doubletalk, there are probably at least 1000 people looking for jobs right now who are qualified to run the SNB.  -Run it to the satisfaction of the criminals in charge of Switzerland is a different argument that I don't care about at the moment-. 

Public servants should be so above impropriety that any hint of wrongdoing results in their immediate replacement with civil penalties as decided by the people affected.  It's not like they are not a dime a dozen.  This applies to any public post in any country.

lotsoffun's picture

i have no idea what the swiss bank charter is interms of being a public servant.  but i DO KNOW FOR CERTAIN, that nobody that works at the united states federal reserve bank is a public servant.  it is a private corporation owned by the member banks.  this is what the 99% in the US doesn't understand (and it is understandable because of the media presentation of bernake and company as some kind of accountable benign dwarf).  he is accountable to nobody but lloyd and jamie.



onebir's picture


What about going long CHF? If the Euro starts to recover, the CHF peg could come under upward pressure vs the Euro. It looks like this was happening on Friday.

That'd mean losses on the SNB's euro position. Hildebrand/SNB's credibility's not exactly maxed out, they might end up rolling over & letting the CHF appreciate.

& there must be some traders out there who'd love to f**k the SNB right back.


anonnn's picture

WIll someone explain the circumstances under which a person who is in the highest position of soversign financial trust and thus annointed with highest integrity, has a spouse that clearly acts in a manner that reeks of illegal insider trading?

... that would clearly discredit the trusted person and smear his integrity except for ability to keep it secret?

...secret? How can it be secret when the act involves brokers and transaction/audit trails?

...that has obvious risk of bringing him/them down?

...that will discredit the government and culture?

 It wasn't even OtherPeoplesMoney. How is it possible she did not know the risks to their own money/status? Or care? Was it deliberate?

Ummm,  anyone who knew the direction of the bet that the GrandMucketymuck's wife was making, would of course give a heads-up to friends and cronies. That begs the audit of who else may have acted to profit or step out of the way on existing positions would be compromised. How could anyone maintain a contrary position in the face of such information?

Rumor would spread and be a valuable, credible sign of market direction to fellow cronies...if secrecy could be maintained, especially as she comes from a background of insider-club wiring, which gives the lie to it being a one-off.  Also, it would have the very desired effect to weaken the SFranc, no?

TheVeryBestPeople have such a difficult life, risk so much and work such long hours. Surely, they are worthy of all their privileges and deserving of mountains of wealth? 

lotsoffun's picture

every country has different rules/laws/regulations - i don't know the swiss laws, but from what i read, it really is ok with swiss law what she did.  so it's just a moral issue.  we will have to deal with that.  if swiss people don't like it, they need to change their laws.

merchantratereview's picture

The scandal is she (only) made a 12% profit.

Joebloinvestor's picture

Just another example of the "elite" getting away with unethical conduct and punishment of whistleblowers.


What does one expect from bankers anyway?

mendolover's picture


earnyermoney's picture

If only the Swiss had an NDAA. They could hold these snitches in a black prison or kill them in cold blood for treason.

jimmyjames's picture

While expressing regrets, Mr. Hildebrand portrayed the accusation of insider trading as the work of his enemies on the Swiss political right...


Typical elitist reaction-

Throw the first whistle blower in jail-it seeds fear into all other employees who dares to have a conscience-during the greatest robbery on earth-

brushless backlash's picture

In my first devils advocate moment, i have to ask - What if there is an investigation and it turns out she did call it right?  One thing i found about her was that she has had either a lot of "luck" with forx over the last 30 years, or she's been able to find the inside track no matter what firm she's worked at.  He on the other hand is a realist so they have a 5% chance of being clean of all charges.  

Kayman's picture

And to up your devil's advocacy. What if, they did the right thing, and stayed the fuck out of currency trading; in the first place.

willien1derland's picture

The tale of two responses - the IT guy goes to jail for breaking the law but turns himself in as an act of acceptance for his violation...ok but their is honor in his actions - Juxtapose Hildebrand - arrogant theif....Mr. Hildebrand in his arrogance does nothing more than speak empty words-->OBVIOUSLY HE NEVER told his former currency trader wife about the Swiss central bank's plans, and although he 'appreciates' the public's skepticism (pathetic Hildebrand has just joined the Jon Corzine's Impunity Network) BUT of course he will not be prosecuted or investigated...how many times & in how many countries has this same story been told...Jon Corzine...I have NO IDEA where the money went...Hildebrand--> it was obviously a coincidence that my wife makes a trade and earns $50K profits in a couple of days...Could happen to anyone, right?....Dear Mr. Hildebrand, at present your crime goes unpunished, however, there will be a day when Social Darwinism you currently enjoy will take an awful turn for the corrupt and your empty words will earn you a ride on the Karma Wagon - God is not mocked, whatever a man sows, that he will also reap...

Dapper Dan's picture

Moral men pitted against the immoral have this advantage, primary allegiance to loyalty and honor.  Predators and parasites have low latency loyalty if any.  Moral men draw from a deep well of everlasting water while immoral sup dew and tears.  No way can they maintain a cohesive esprit de corps only on plunderous gain; men that subscribe to such venality have none of the other qualifying virtues with which to maintain their power.  Like the USA, betrayed from within by self-servers instead of men of majesty, (the bankers) will be brought down by the decrepitude of avarice. 

Money is an instrument which conveys man's goodwill service to fellow man in furnishing him the essentials of survival and luxuries of hard won age in grade.  Losing sight of that, men seek profit in algorithms, sneakery, subtle diminishment of the institutions and exchanges. 

They never prosper long.  It is like an error in genetic code which destroys the creature with cancer.  Men who trade without the final object (increase of joy for their fellow) are in the wrong path, and sabotage their own futures. Here and in eternity.

Seize Mars's picture

Moral men pitted against the immoral have this advantage...Here and in eternity.

Wow, that's a very thoughtful post. Good work!

I think you are correct.

JLee2027's picture

Bad all the way. Outrageous.

Hildebrand should be fired.  His wife/both of them should be investigated, and probably indicted for insider trading. The IT guy should be given a wrist slap (a couple week suspension maybe) and restored to his job.



Ned Zeppelin's picture

Or better yet, protected under a whistle blower law designed precisely for this sort of event. That would keep the 1% on their toes.

ebworthen's picture

They are part of the 1%, therefore, it is o.k. for them to do such things.

The "little people" don't understand what it is like at the top, and don't deserve inside trades.

How dare the the peasantry question royalty!?!?

(/sarc off)

distopiandreamboy's picture

Its like some twisted Milgram experiment

blindman's picture

criminal psychopaths seek a unifying principle and/or/and
"person"; name, to shed their shame and anchor their crime.
Charles Manson Superstar
warning. disturbing presentation at link, perhaps not appropriate
material for children or other psychopaths.
here, some other fascinating links from here and there.
the american empire
by garet garrett
Part 1 - A Tale of Two Cities by Charles Dickens (Book 01, Chs 01-06)
The Iliad - Book I - Homer (Alexander Pope translation)