June 11, 2009 / 4:23 PM / 10 years ago

Crown Forex appeals regulator bankruptcy ruling

* Appeals bankruptcy ruling within 30-day deadline

* Says regulator ignored earlier appeal against liquidation

* Says problems began with money-laundering probe

* Regulator says it has applied law correctly

By Martin de Sa’Pinto

ZURICH, June 11 (Reuters) - Foreign exchange provider Crown Forex said it was appealing against a bankruptcy ruling by Swiss markets regulator FINMA and might also sue the regulator.

Crown Forex, which says on its website it charges a one pip spread for forex trades, has appealed to the Federal Administrative Tribunal, its chairman told Reuters.

“The FINMA decision (to declare bankruptcy) was made to avoid responding to our appeal against an earlier decision to liquidate the company. FINMA are applying the law incorrectly,” Crown Forex Chairman Ibrahim Ali said late on Wednesday.

FINMA responded it was “positive” the court would decide it had applied the law correctly in the case of an appeal, it said in an email to Reuters on Thursday. [ID:nL8320450]

New Swiss rules have made operating more onerous for foreign exchange providers since April 1, with liquidity requirements and and obligation to be licensed by the regulator.

A FINMA spokesman Alain Bichsel said companies were given a year’s notice to comply with requirements. Both FINMA and Crown agree that Crown was not in compliance at the time of the deadline.

Ali said Crown’s woes began late last year when FINMA investigated it for money laundering on information from a now former Crown director. Ali said Crown was cleared but FINMA took control of the company anyway, citing possible liquidity issues.

FINMA ruled Feb. 23 to liquidate Crown, but said the company could appeal against the decision within 30 days.

Ali said the investigation had hampered Crown’s efforts to meet the requirements for a banking licence, including an audit.

The company asked the court for an extended deadline to meet new capital requirements, complete the banking application, employ additional risk management staff and address several client complaints that had come to light, Ali said.

But he said FINMA immediately began telling Crown clients the company would be liquidated, and only stopped after Crown protested its appeal was yet to be heard.

“FINMA knew our appeal was strong, and that the delay in our compliance was due to FINMA, so they cancelled the liquidation decision and said that under their estimated financial reports, which did not have any credibility, they considered the company bankrupt,” said Ali.

Reuters put all of Crown’s comments to FINMA.

The regulator said it had taken a decision that involved forced liquidation of Crown due to solvency problems. It declined to respond to any other of Crown’s comments. (Editing by Will Waterman)

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