Employer (bank) restricting the use of other brokers

Hi all,

After the elimination of the inactivity fee in IBKR (at perfect time, when I was just about to set up an account with Degiro) I happily opened an account with IBKR, only to find out the next day that as an employee of a certain swiss bank I cannot open an investment account with a broker other than that bank :man_facepalming::face_with_symbols_over_mouth:.

There is a workaround that the account would be opened in my wife’s name. Does anybody have any experience with such situation? Do you know what the implications would be? E.g. with regards to tax declaration? Next year we would be filing the tax declaration for the first time, but as far as I know the declaration is together for the married couple, right? So then I guess it shouldn’t matter, who is the owner of the brokerage account from the taxes point of view?

My wife, however, has a much lower income than me (around CHF 1000/month)… is it possible she could be considered as professional investor because of that?
In case I would leave my current employer later on and would not be restricted from having an account with IBKR anymore, do you know how it is with a transfer from one account to another within IBKR? I’m planning of course to ask this also in IBKR, but maybe somebody has some experience with that…
Any other tips for this situation? Besides resigning? :sweat_smile: Although I’m seriously considering that as well, because this restriction is quite frustrating!

The “professional trader classification” is one of the greatest (though oft-recurring) misconceptions on this forum in that violating one of the well-known would make one a professional trader.

Can’t imagine that, unless she exhibits a “professional” trading pattern. She may have inherited funds, she may even have received them from her husband - why couldn’t she invest them personally?

However…

One: Read IBKRs terms and conditions and be careful with the declarations your wife will make upon opening an account.

I agree that it’s unlikely to be(come) a tax issue.

To spell out just one (from their IBKR LLC terms):

“Client represents that all assets held in Client’s account belong to Client and that all trading Client’s account is conducted solely for the benefit of the Client.”

Some time ago I worked for one of the major banks in CH and at this time the contract said that I have to do ALL banking with that bank, so not only brokerage accounts but everything had to be with them and they are monitoring that stuff. I noticed that because once I accidentally bought stocks of the bank outside of the trading window (after the general meeting but too early) and I got an email within 10 minutes from the control room that I have to revert the transaction immediately and transfer any potential profits to the banks pension fund. It was not a big deal and they didn’t make a drama because I had an explanation … I just was not aware that the trading window only starts a few days after the general meeting and but there was no malicious intent and I did not posses any privileged information at all.

But I would be very careful with what you’re doing e.g. transferring large sums every month to another account … that could raise suspicion and you might need to answer some questions. However, I also know people who were trading with a 3rd party broker at this time and didn’t have any issues, just make sure not to buy products that are managed by the bank or the banks own stocks, or a broker that is using the bank as intermediary etc.

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IB has an option “Spousal allowance” as a source of income. If you wife choses this, everything should be fine from IB’s point of view.

It could get messy for a divorce though.

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This is what most banks do since it’s the easiest way to monitor your activity and therefore comply with the regulations that require they do make sure you do not use any insider information for your own benefit. Even if you are far away from any insider information.

However most internal policies allow for exceptions if you waive the confidentiality and give them the statements. Furthermore, IB allows for automatic feeding of your transactions to your bank’s compliance department. I would say that before doing anything complicated you should talk to compliance/HR and argue that despite your employee special conditions their service is still more expensive than that of IB and that therefore there’s prejudice and you request an exception. And see how that goes. Worst case scenario they say no…

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Actually of all the banks I’ve been working for e.g. universal banks, private banks, foreign banks, the only one who insisted on doing all banking stuff with them was the big one I mentioned above. Others didn’t have a problem when people had 3rd party accounts and one of the private banks I worked for even (while providing free banking services for employees) unofficially recommended to also have a separate account and split salary payments across the two, because even though confidentiality is very important etc. people in specific functions might have access to data that could reveal your salary if you have everything with them.

Good luck with that. That would probably require an N-2/3 approval and before wasting their time with such inquiries I would think twice if it’s really worth it/necessary, especially if you’re interested in potential promotions later on :wink: Besides that, it is very unlikely that it would be approved and the most likely answer would be: Thank you very much for your inquiry but unfortunately we cannot make any exception and as such, as per your contract, we require you transfer your IB securities and cash within 30 days to us. Thank you for your understanding and have a nice day. Wouldn’t be surprised if after that they pay closer attention to you and make sure you really transfer funds to them.

Unless you really work in a position where you are in possession of privileged information, I think the consequences would not be that grave if you “forget” that it’s not allowed to have any other accounts and it is probably even questionable wether from a legal perspective the company is really able to enforce that rule. If you take it by word it would not even be possible to have a rent deposit account with another bank and many landlords won’t let you choose the bank with which they want you to make a rent deposit account.

Sometimes it is easier to ask for forgiveness than for permission. :wink:

If you have access to privileged information it is a complete other story though.

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That would probably require an N-2/3 approval and before wasting their time with such inquiries I would think twice if it’s really worth it/necessary, especially if you’re interested in potential promotions later on…

There was a similar topic some time ago, and I had the same problem. In theory, we can ask for exceptions but as @Patron is writing whole process is just too complicated and eventually is just easier to comply with.

Maybe if you work in IT you could be an external contractor, which would allow you to have an account where you want but you would lose employment perks.

I have blocked certain users, so I will reply just once and then move on with my life.

We are speaking about holding a portfolio and securities transaction, not managing your cash. There is no restriction about that.

It is not that banks are whimsical, but rather an obligation stemming from FINMA Circular 13/08, Margin no. 53–55:

Supervised institutions must take measures for the surveillance of employee transactions.
These measures must in particular be capable of preventing employees from misusing
insider information in transactions for their own account and of identifying such misuse. Due
attention must be paid to all custody accounts and related cash accounts held by employees
with the supervised institution or a third-party institution as well as those for which employees
have beneficial ownership or power of attorney

They must monitor your securities transactions. In practical terms it is easier to forbid you from hold securities at any other bank or broker and to forbid you for having any PoA on any other securities dealing account. That is subject to internal directives and not imposed by FINMA.

True. Depending on you employer’s internal regulations your case may fall outside the guidelines and therefore the exception can be rejected. It might be worth taking some time to read the internal directives, though.

But please don’t misinform. Do not mix promotion potential and this. If anything, it shows that you are willing to conform to the rules.

You can also take the risk of not declaring this portfolio and go on with you life. However in this case it will be you breaching the regulations and depending on your employer you might be fired. Again, in practical terms it is very unlikely that they find out especially if you a) use another bank as a stepping stone, i.e. , do not send money to IB directly and b) still hold some securities at your employer’s to save face.

That’s it, I will not feed the troll any further

Funnily enough, if you are an external contractor you are not bound by these regulations. You will have to sign confidentiality and other agreements, but you can hold your securities wherever you see fit as you are not an employee and thus outside of the scope of the FINMA circular.

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Exactly, that is why the current restrictions by some banks don’t make any sense…

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Withdraw cash from your salary account, deposit it on your CSX account using an ATM from CS (UBS account or whatever if you work for CS), make the transfer to your IBKR account.

Untracable.

Obviously bypassing internal rules and policies might still lead to consequences.

In our bank, broker accounts must be reported and once every x months I need to submit my trading activities. I understand that this might not be practicable in a big bank.

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While I’m not disputing the claim that you can often get away with hiding your tracks and lying…

Is it really as easy as transferring the assets to the wife as a “workaround”, then make the investment decisions himself - and expect to get away with it without violating the bank’s personal trading policy?

Seriously, do bank’s personal trading policies really not cover wives and girlfriends?

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You seem to be in a commited relationship so chances are it’ll end up alright but, while I’d trust my wife with our money, I’d consider the risk of something going wrong in our relationship with my girlfriend as a significant enough risk to counteract any gain I could make on lower fees from my broker.

Plus, it may put a strain on your relationship since in case something does go wrong and stocks plummet, she’d officially owe you the original invested amount and not the current value of the stocks. Officially, she owns the losses and the gains, the equity risk is all hers to take in your agreement, that’s a lot to ask from a partner with whom we’re not yet in a registered partnership.

All in all, a very risky endeavour in my view (though it may work out just fine for you).

Edit: my own stance would be to consider compliance requirements as part of the total compensation package and evaluate my compensation with that in mind. That may warrant negociating for a higher salary and/or switching job and changing industry if the bank can’t compete with better conditions elsewhere. If you can’t find a job paying the same amount with comparable benefits less the requirement to invest your assets with your employer, it’s likely that drawback was already factored in when assessing the total compensation package.

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They probably do, especially with a good lawyer :upside_down_face:

For members that are working in a bank, it could be interesting to negotiate the fees transaction and management of the bank house broker ? Just asking, as in my view the risks don’t cover the benefits of trying to not comply to your employer.

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They do cover this. I just read the policy on Personal Investment and they mention that the following are also considered:

  • Individual living in the same household
  • Individual whose relationship is such that the person has a direct or indirect material interest in the outcome of the trade.

I’m not sure where you are working, but I recommend that you read the policy and make sure that you fulfil all its conditions.

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They can’t stop you from giving out private loans to other people - but they may still find you non-compliant with your bank’s policies.

If compliance departments really dislike one thing, it’s probably blatant attempts at circumventing policy. And that’s what you’ve gone on record about here in this thread: How you’re skirting the rules with how you who bought the assets in (quotation marks your own) “her” account, and how losses will (only) “technically” be in her name, as a “workaround”.

I’m in no way here to judge people. And I don’t work for your bank’s compliance department (side note: …since you and your employer are rather easily identifiable). But I would consider risky not only your public disclosure of your little workaround but also the scheme itself.

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I think that rule is just for the event if something happens the bank can fingerpoint at you and say it’s because the employee didn’t follow the rules. But as long as nothing happens they don’t really care. There are many people out there with 3rd party brokerage accounts and they don’t get fired because of it.

Nope, internal and external audit are interested in such topics and the applied controls thorough the year (according to the audit plan).

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