Intentional violation of obligation to publish ad hoc disclosures

In response to an MDAX company's intentional failure to publish inside information in a timely manner, BaFin imposed an administrative fine of €195,000. Although the company had considered the need to change the forecast and issue a profit warning to be inside information, it failed to publish this information without undue delay. Instead, the company published the ad hoc disclosure only several trading days after the text had been prepared internally and released for publication.

Violation of financial reporting requirements

In response to a domestic issuer's intentional failure to publish two half-yearly financial reports in a timely manner, BaFin imposed a total administrative fine of €186,000. The company subsequently published the reports with a delay of several months. In the company's opinion, it was not possible to publish the two reports because insolvency proceedings had been opened in the meantime. It was therefore not clear whether the company's financial reports would have to be prepared on a going concern basis or for a discontinued operation. However, there were no provisions in accounting law that prevented the timely preparation and publication of the reports. The company was aiming, under protective shield proceedings, to develop a recovery plan and subsequently implement the plan in insolvency proceedings under self-administration. There were no indications that the recovery plans could not reasonably be expected to be successful. The accounts could therefore have been prepared on a going concern basis.

In any event, a company has to meet its financial reporting requirements even if it is uncertain that it will continue as a going concern. The provisions containing the financial reporting requirements do not allow for any exception or exemption criteria for companies in financial difficulty. Timely reports are of key importance for investors, especially when a company faces a crisis.

Violations of reporting requirements

BaFin imposed an administrative fine of €25,000 on a financial services institution whose registered office is in a third country. Over a period of approximately four years, the company had failed in a negligent manner to report more than 160,000 exchange transactions in accordance with section 9 (1) of the Securities Trading Act. Companies domiciled outside the European Union that are admitted to trading on a domestic stock exchange and trade on that exchange are subject to the reporting requirement to BaFin. The institution in question justified its failure to file the reports in the first year by, among other things, claiming that it had misinterpreted the relevant national securities law provisions. The company had, however, failed to realise that it has an obligation to familiarise itself with the relevant national requirements. If that is not possible, it can ensure compliance, for example by submitting a query to the supervisory authority.

Naked short selling

BaFin imposed administrative fines totalling €60,000 on a company for committing two negligent violations of the ban on short selling. The company had sold more than 200,000 shares in two transactions without, until the end of that day, being the owner of the shares sold or having an absolutely enforceable claim under contract or property law to be transferred ownership of the shares sold.