Investigations

In 2017, BaFin launched 62 new investigations due to suspected insider trading (previous year: 42; see Table 21 "Insider trading investigations"). Since many of these insider trading investigations involved cross-border issues, BaFin asked foreign supervisory authorities for administrative assistance in 79 cases (previous year: 54). In turn, administrative assistance in insider trading issues was requested from BaFin in 28 cases (previous year: 35).

BaFin found evidence of insider trading in 18 cases (previous year: 21). It therefore filed complaints against 40 individuals with the competent public prosecutor's office (previous year: 49). In 11 cases, BaFin found no evidence of insider trading (previous year: 23) and therefore discontinued the investigations. 72 investigations, some of which had been initiated in prior years, had not been completed by the end of 2017 (previous year: 39).

Table 21 Insider trading investigations

Insider trading investigations

BaFin

Sanctions

In 2017, final court judgements following summary proceedings were handed down to 4 individuals (previous year: 1; see Table 22 "Completed insider trading proceedings"). The investigations resulting in these sentences were all initiated by complaints filed by BaFin. A total of 32 proceedings (previous year: 89) were discontinued by the prosecutor's office. In 27 of these cases (previous year: 75), the prosecutor's office was unable to demonstrate that a conviction was sufficiently probable to bring a charge in accordance with section 170 (2) of the German Code of Criminal Procedure (Strafprozessordnung). Another 5 investigations (previous year: 14) were discontinued by the prosecutor's office in accordance with section 153a of the Code of Criminal Procedure, after the defendants had made payments as part of out-of-court settlements.

Table 22 Completed insider trading proceedings

Completed insider trading proceedings

BaFin

Selected cases

VERBIO Vereinigte BioEnergie AG

Two sentences for insider trading handed down by the Local Court of Frankfurt am Main to an employee of VERBIO Vereinigte BioEnergie AG (VERBIO AG) and his mother became final in March 2017. BaFin had filed a complaint with the public prosecutor's office in Frankfurt am Main in 2016. The court imposed a fine of 90 daily units of €200 each on the employee, because he had illegally recommended the purchase of the insider securities. His mother had to pay a fine of 90 daily units of €40 each for insider trading.

On 4 November 2013, VERBIO AG published an ad hoc disclosure, in which it raised its earnings forecast for the 2013/2014 financial year (as at 30 June). Following analysis of the preliminary figures as at 30 September 2013, it was able to increase its EBITDA (Earnings before interest, taxes, depreciation and amortisation) to approximately €11 million (2012/2013: €1.6 million). In addition, the company was largely expecting EBIT (Earnings before interest and taxes) to break even in the 2013/2014 financial year (previously: –€5.0 million). After the publication of the disclosure, the VERBIO share price rose by 30 percent.

A few days before the disclosure, the VERBIO employee's mother began to buy shares of the company, in an amount eventually totalling approximately €51,824. She sold them at a profit between March and May 2014.

Alphaform AG

In another insider trading case, which was initiated by a complaint filed by BaFin in 2015, the Local Court of Munich handed down a sentence to a department head of Alphaform AG in November 2017, imposing a fine of 90 daily units of €90 each. In addition, the court ordered an amount of €10,000 forfeited.

Although the proceedings against another employee of the company, who had passed inside information to the department head without authorisation, were discontinued, this individual had to pay a fine of €4,000.

Alphaform AG announced on 28 July 2015 that it had lodged an application for insolvency with the Local Court of Munich because of imminent insolvency. On the next day, the price of Alphaform shares on Xetra opened at €0.64, almost 70 percent down on the previous day's closing. In the course of that day, the shares traded more than 80 percent lower at times.

BaFin's investigations found that the employee had passed inside information to the department head without authorisation. On the basis of this information, the individual sold 10,000 Alphaform shares only about an hour before the insolvency disclosure was published, thus avoiding the fall in the share price.

Hugo Boss AG

On 3 February 2017, the prosecutor's office in Frankfurt am Main discontinued insider trading proceedings against payment of €1,000. The proceedings had been initiated by a complaint filed by BaFin in 2016. The defendant, a senior executive at Permira, a major shareholder of Hugo Boss AG, admitted the charges and had previously made a voluntary donation of €3,500.

At 8.29 p.m. on 2 May 2013, the Bloomberg news service reported that Permira was planning to place seven million Hugo Boss shares (9.9 percent of the subscribed capital) in an accelerated book-building process. This report was confirmed in an ad hoc disclosure published by Hugo Boss AG at 8.01 a.m. on 3 May 2013 and further details were provided. According to this disclosure, Red & Black Holding GmbH, a subsidiary of Permira, was planning to reduce its interest to 56 percent. Following the publication of the Bloomberg report, the opening price of the stock on Xetra on the morning of 3 May 2013 was €88.95, down four percent on the previous day's closing price. The share price continued to decline in the course of the day, closing at €87.08, around six percent lower than the previous day's close.

In the course of 2 May 2013, the above-mentioned senior executive at Permira bought a total of 21,100 put warrants on Hugo Boss, splitting his buy orders among three different issuers of warrants. He sold the warrants after the news was published and thus made a total profit of €3,003.