The Swiss Federal Banking Commission is investigating stake-building in Sulzer, the engineering group, by a company with links to Viktor Vekselberg, the Russian tycoon, amid concern that extensive derivative trading in the Swiss company’s shares may have created a false market.

Weeks of speculation that Victory, an Austrian conglomerate, and Renova, a company controlled by Mr Vekselberg, were secretly acquiring a stake in Sulzer using over-the-counter options was given credence late last week when Renova issued a statement indicating that Everest, a company jointly controlled by Renova and Victory, intended to acquire 18 per cent of Sulzer and a 14 per cent interest in Sulzer options.

According to Sulzer, no time-frame was given for the share purchase and Sulzer has not yet received official notification of an Everest shareholding.

At the same time, attention is being focused on the activity of Deutsche Bank and Zürcher Kantonalbank, which recently revealed large interests over Sulzer shares and call options. On Wednesday Sulzer said that various subsidiaries of Deutsche Bank had notified the engineering company that on April 20 they held long call options over 20 per cent of Sulzer. In addition Deutsche held 64,559 shares, representing 1.78 per cent of the voting rights.

In its statement, Sulzer said that it was unable to determine whether the Deutsche disclosure related to Renova’s announcement on April 20 of its intention to acquire a Sulzer stake. However, sources in London indicate that Deutsche transferred Sulzer stock to Everest.

Sulzer yesterday revealed that Zürcher Kantonalbank informed the company that on April 20 it held 8.5 per cent of Sulzer’s stock.

There is mounting alarm in Switzerland over the use of “cash-settled options” to mount backdoor takeovers of Swiss companies. Investors who sold stock in the build-up to the recent announcements are believed to be concerned that they were misled.

Swiss regulation does not require disclosure of the build-up of an interest over shares in the derivative market, and several companies have changed control recently using this mechanism, some of which have connections to Victory.

In 2005 the Austrian raider took control of Oerlikon, another Swiss engineering company, ousting the founding family after acquiring a 49 per cent stake using cash-settled options. Subsequently, Oerlikon acquired Saurer using the same technique and this week Laxey Partners, the UK hedge fund, revealed it had acquired 23 per cent of Implenia, a leading Swiss construction firm.

Renova has said that it has no plans to take over the Swiss company but Sulzer’s chairman, Ulf Berg, attacked the secret stake-building strategy. “When it comes to the methodology that Victory and subsequently Renova have used to amass a stake of 32 per cent in Sulzer, I would say this is deplorable for the Swiss financial society and investment community that it is possible to pass four disclosure levels without disclosing the stake,” he said.

In the UK, the Takeover Panel plays a more active role in the supervision of stake-building activity but the FSA recently embarked on a consultation relating to disclosure of contracts for difference (CFD), a form of option. The FSA noted “the risk of stealth takeovers by predatory investors using CFDs to bypass major shareholder notification rules”.

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