Laxey Partners, the activist British hedge fund, is facing a possible criminal prosecution in Switzerland after the country’s banking regulator said it had breached disclosure laws while building a 23 per cent stake in a local construction company.

In a statement, the Swiss Federal Banking Commission (SFBC) said it would file a criminal complaint against Laxey with the Swiss Department of Finance over its failure to disclose its holding in Implenia, a building services company.

The Swiss Department of Finance has the power to bring criminal charges against Laxey, which is run by Colin Kingsnorth, a well-known City fund manager who has gained notoriety for his outspoken attacks on several large companies including British Land.

The SFBC’s year-long investigation focussed on Laxey buying contracts for difference (CFD), a form of derivative that can be used to gain exposure to a company without buying ordinary shares.

CFDs have been the subject of controversy because in most jurisdictions they carry less onerous disclosure obligations than standard shares, although they carry the same voting rights.

In its statement, the SFBC said Laxey "deliberately and knowingly" violated Swiss rules through its "indirect and clandestine stake-building" using a network of five unnamed Swiss and European banks.

Laxey Partners could not immediately be reached for comment, although the fund is reported to be planning to appeal the decision.

Implenia welcomed the decision and said it was now “considering making various filings with the federal . . . authorities to ensure that the responsible people are convicted and fined”.

It added that it also plans to file a lawsuit intending to suspend Laxey’s voting rights and to recover what it calls “illegal” profits that Laxey made on the stake.

Implenia also said it would approach the UK Financial Services Authority (FSA) “demanding sanctions against Laxey and its responsible officers”.

In November, the FSA published a consultation paper calling for greater disclosure rules for investors that own CFDs in UK-listed companies.

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