The European Court of Justice, in Kirchberg, will hear the pleas of the lawyers on whether the Luxembourg regulatory agency CSSF can invoke professional secrecy and the scope of the exception for criminal cases. Pictured: an ECJ courtroom is seen in a 2009 archive photo published on the ECJ’s website.
ECJ hears first pleas by UBS on professional secrecy of CSSF
The ECJ has been asked to give an opinion on two questions relating to the professional secrecy of the CSSF.
The case has links to the Madoff scandal. In 2010, the CSSF questioned the professional honourability of the lawyer Pierre Delandmeter, who was independent administrator of Access Management Luxembourg and of the investment fund Luxalpha, two companies which were used by Bernard Madoff to collect the savings of hundreds of European investors.
Delandmeter was forced to resign from all his administrative posts in entities that are controlled by the CSSF on the grounds that he was not to be trusted.
The lawyer appealed against the decision, arguing that the real culprits are to be found with UBS, which was the custody bank of Luxalpha and the advocate and manager. UBS was legally entitled to sign broker agreements for Madoff’s US financial corporation.
While the lawyer fought against this decision, he wanted access to correspondence between the CSSF and UBS to prove that he was not the sole person who had knowledge of the affair. The CSSF denied access, referring to its own professional secrecy.
An EU Directive (2004/39/EC) on markets in financial instruments provides that any confidential information which competent authorities receive in pursuance of their duties under the Directive shall be subject to the conditions of professional secrecy. An exception applies to cases covered by criminal law.
Luxembourg’s administrative court decided in favour of the lawyer, arguing that “the obligation for professional secrecy does not count when a decision of the commission is appealed.”
The administrative court ordered the CSSF to hand over the correspondence, especially that with UBS; and copies of its inquiry files on the Madoff scandal.
However, UBS launched third party proceedings against this, so that Delandmeter could not access the files or make them public. UBS based its case on jurisprudence by the ECJ.
Luxembourg’s administrative court has suspended its decision and waits for the court’s interpretation on the balance between professional secrecy and the right to a fair trial.
In this case, it asked the ECJ to clarify the scope of the exception for criminal cases. The Luxembourg court asks the Court of Justice to clarify the scope of the exception for ‘cases covered by criminal law’. While traditionally, under Luxembourg law, the sanction would be considered to be an administrative one, it is possible that under the ECHR it could come within the scope of criminal law.
On Thursday 1 June, the hearing will give a first glimpse on how this case can be interpreted.