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German Authority Gives No Mercy to Insider Trading

Actions, Crime

On January 27, 2021, the Federal Financial Supervisory Authority (BaFin) reported an employee of the securities regulator to the Stuttgart public prosecutor on suspicion of insider trading. The employee had sold structured products with the underlying Wirecard AG on June 17, 2020. On June 18, 2020, Wirecard AG made public that it was not yet possible to obtain sufficient audit evidence about the existence of bank balances in trust accounts totaling 1.9 billion euros. The financial supervisory authority had discovered the suspicion as part of their special evaluation. BaFin immediately fired the employee and initiated disciplinary proceedings.

BaFin tightened the compliance rules for its employees’ private securities transactions in mid-October 2020. Speculative financial transactions, i.e. short-term trading, for example with derivative financial instruments or stocks, have no longer been possible since then.