In the context of implementing the Market Abuse Regulation, it was at times argued in the specialist literature that on 2 July 2016 no effective criminal and administrative fine provisions were in place for infringements relating to insider trading and market manipulation. This lack of criminal liability was based on the most lenient law and would therefore also apply to all acts committed before 2 July 2016 for which no final ruling had been made; this was tantamount to a general amnesty. BaFin did not share this opinion. On the contrary, the Securities Trading Act contained adequately specified criminal and administrative fine provisions even on 2 July 2016.

The German Federal Court of Justice (Bundesgerichtshof – BGH) concurred with this view and declared in a court order dated 10 January 2017¹ that, as a result of the amendments to section 38 (3) no. 1 and section 39 (3d) no. 2 of the Securities Trading Act, no loophole had been created in the ability to prosecute market abuse as at 2 July 2016. The newly worded criminal and administrative fine provisions involve blanket penal provisions which make a static reference to the applicable provisions of the MAR as amended on 16 April 2014. According to the German Federal Constitutional Court (Bundesverfassungsgericht), these kinds of static references are not problematic.

Nor did the references lead into the void, because the MAR had already been in force since the middle of 2014 and had merely not (yet) become applicable at the Community level as at 2 July 2016. According to the Federal Court of Justice, references in the German criminal and administrative fine provisions to the provisions of the MAR led to a situation where these provisions were declared (jointly) applicable in Germany by the German legislators, even before they became directly applicable from 2 July 2016 onwards.

The principle of legal clarity under constitutional law was likewise not in conflict with punishability, as both the reference and the source standards had been properly promulgated so that anyone could have foreseen which behaviour was prohibited and liable to punishment or an administrative fine. This was because in substance the principle of legal clarity entailed the obligation to describe the conditions of punishability to such a level of detail that the significance and scope could be recognised or determined through interpretation. In the opinion of the Federal Court of Justice, the prohibition provisions of Articles 14 and 15 of the MAR in conjunction with Articles 7, 8 and 12 of the MAR were sufficiently transparent.

The assessment should in particular take into account the fact that the normal addressees were usually natural persons with a specialised education. Where that was not the case, the Federal Court of Justice believed that the players involved had a duty to seek training and advice.

In a case of insider trading in October 2016, the Regional Court (Landgericht) in Mannheim had not identified any legal loophole with regard to punishing criminal insider trading either.

Footnote: