BaFin's WpHG Administrative Fine Guidelines II
Article from BaFin's 2017 annual report
BaFin has brought its administrative fine guidelines dating from 2013 in line with the provisions of the Transparency Directive II1 and the Market Abuse Regulation (MAR)2. The amendments were published in February 20173. BaFin uses a two-stage system to determine the amount of an administrative fine.
Stage 1 – determining the applicable basis for imposing a fine
If a legal person is involved, BaFin first determines which basis for imposing the fine is to be used. Administrative fines can be imposed on the basis of an absolute maximum or on the basis of a revenue- or surplus-related maximum. The latter cannot be applied to natural persons.
Stage 2 – setting the fine
The second stage involves setting the appropriate level of the fine, which is primarily based on the circumstances of the offence committed and the perpetrator. To this end, in step 1, BaFin initially determines the base amount of the fine on the basis of the issuer's market capitalisation and an assessment of the circumstances of the offence. The guidelines define six groups of issuers, depending on size, ranging from issuers with a market capitalisation of up to €10 million to issuers with a market capitalisation of more than €20 billion. The circumstances of the offence are classified as "mild", "moderate", "severe", "very severe" or "exceptionally severe". The last two categories, in particular, are used to capture non-typical cases with an increased level of culpability. This allows BaFin, if necessary, to impose a fine close to the applicable maximum in order to ensure the fine has a punishing effect.
Subsequently, in step 2, BaFin adjusts the base amount, if there are mitigating or aggravating circumstances. For example, a confession may have a mitigating effect, while a previous violation of capital markets law punished by a fine may have an aggravating effect.
Lastly, in step 3, BaFin considers the financial circumstances of the party concerned. In view of the significantly expanded upper limits of administrative fines, this step in the adjustment process is increasingly gaining importance. A reduction in the amount of the fine by way of a settlement remains an option within the scope of the WpHG Administrative Fine Guidelines II.
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