I love a stink

My kind of story in the Swiss papers today. I love it when big shot central bankers get their dirty laundry made public.

Kashya, the wife of Phillip Hilldebrand (head of the Swiss National Bank) sold Swiss Francs just a few days before the Swiss National Bank initiated exchange controls and devalued the Franc. The timing of the transactions was nearly perfect. The suggestion is that “pillow talk” between husband and wife lead to the trades.

Don’t expect heads to roll over this transgression. There has been a complete review by Swiss authorities and the conclusion is that there were no insider trading violations by the wife.

That’s not to say that trades did not happen.

Apparently, Kashya Hildebrand bought ~$500,000 when she shorted the CHF. This relatively small transaction netted the Hildebrand family only ~$50,000 in less than one month. Being that the amount is so small, the conclusion is that nothing nefarious has taken place. From NZZ.

Therefore no central banker in the world would risk his job.

Really? Only $50k extra for the wife’s account? That’s not enough incentive? I guess so. Hubby earns CHF 862,000 ($950,00) at the SNB. (A sweet deal, Ben Bernanke takes in less than $200k)

What's fascinating about this story is how it came about. Who blew the whistle on wifey?The answer is that Kashya Hildebrand maintained an account with a (very) private bank called Sarasin. When she did the trades back in August someone at the bank alerted an opposition politician, Christoph Blocher. Blocher brought the evidence to the Swiss President, Micheline Calymy-Rey and insisted on an investigation.

The information was leaked by a bank employee? To a politician? Folks, this stuff is not supposed to happen in Switzerland. This is the land of banking secrecy. This leak is highly illegal. This affair proves one point. There is no secrecy left in Swiss banking (for residents and non-residents alike). Anyone who thinks there is, is just wrong.

It’s not possible to know the facts in this story. It’s been whitewashed. There are a number of possible scenarios. I wish I knew which one was right:

-Philipp Hildebrand never told his wife about the pending exchange controls and devaluation of the CHF.

-Kashya Hildebrand acted independently; she never informed her husband of the transactions she made with the family’s money (she also bought dollars and sold CHF for her daughter).

-Kashya Hildebrand routinely bought and sold dollars. The timing of the transactions (August 15th) was pure coincidence.

-No other employees of the SNB (or their family members) sold Swiss Francs in advance of the devaluation.

-ALL OTHERS.....

This story stinks. It’s about political intrigue, stolen information from secret banks, leaked information from Central Banks and possible insider currency trading. A nice way to kick off the New Year!