The head of the private bank Swissfirst, Thomas Matter, caught up in illegal trader allegations, has announced his immediate resignation.
A statement on Monday announced that Matter was stepping down due to the growing campaign against him. The merger of banks Swissfirst and Bellevue is being investigated by Swiss authorities on suspicion of illegal insider dealing.
"As before, I am utterly convinced that all transactions and business dealings surrounding the merger were conducted in accordance with [banking] laws and regulations," said the Swissfirst chief executive.
Swissfirst, which put itself up for sale and offered to sweep out existing management this month following insider trader investigations, said it would continue to seek a buyer for some or all of its divisions.
"I feel compelled to make this decision to make it possible again for the Swissfirst group and its employees to run the business free from the discussions about me and ongoing legal disputes, and to protect my family," added Matter.
He explained that his decision to "sacrifice his life's work" had been a difficult one and that he would keep his stake in Swissfirst as a pure financial investment.
Swissfirst announced that it respected Matter's decision and a group of directors would temporarily take over at the helm of the troubled private bank.
On August 17, justice officials said police had searched offices belonging to Zurich-based Swissfirst in connection with a criminal investigation against Matter.
Documents were seized during the raids that came as part of a probe into fraud, embezzlement, improper business dealings and insider trading.
Federal and cantonal authorities are looking into why pension funds sold stock ahead of the merger, thereby depriving themselves of substantial gains. Among those accused, the spotlight fell on Matter, who is reported to have made SFr50 million ($40.1 million) on the deal.
Swissfirst management announced on August 18 that it was prepared to resign and sell the business prompting a big drop in the share price.
Swiss Finance Minister Hans-Rudolf Merz has recently said the case highlights the need to tighten insider knowledge rules. The Swiss Bankers Association has also called for more stringent regulations.
swissinfo with agencies
The Swissfirst and Bellevue banks announced their merger on September 12, 2005.
Ahead of the merger, several pension funds sold their shares in Swissfirst to the bank's chief executive, Thomas Matter.
Trading in Swissfirst shares increased dramatically at the end of last August and before the merger announcement.
Shares in Swissfirst soared by almost 50% after the merger announcement.
There are two types of insider trading – legal and illegal.
Illegal insider trading is the buying or selling of a security by insiders who possess information that is still not public. This puts insiders (people with for example confidential information about a company) in breach of their fiduciary duty.
A common misconception is that only directors and upper management can be convicted of insider trading. Anybody who has material and non-public information can commit such an act.
Insiders don't always have their hands tied. Insiders legally buy and sell stock in their own company all the time. Trading is restricted and illegal only at certain times and under certain conditions.