In the fairy tale, Cinderella is sitting at the table, sorting lentils. She enjoys the help of some doves to separate the good ones from the bad ones. BaFin’s contact point for whistleblowers, which has recently been reinforced, and BaFin’s new Market Contact Group (MCG) carry out a similar task. They examine and filter the information that whistleblowers and market participants bring to the supervisory authority’s attention.

This is a task of great responsibility, as BaFin President Mark Branson noted in an interview with the weekly paper Die Zeit: “We must try to filter out the right information that is important to us and piece together an overall picture that we can use as a basis for reaching decisions.”

Contact point for whistleblowers: more visible and more accessible

Whistleblowers – i.e. individuals who have access to inside information about supervised entities because of their personal or professional circumstances – can get in touch with BaFin’s point of contact. The information they submit can be very helpful and valuable for BaFin, especially if it provides evidence of any misconduct. This enables the supervisory authority to remedy or even prevent undesirable developments.

Over the course of BaFin’s modernisation process, it became clear that BaFin’s contact point for whistleblowers, which was established in mid-2016, needed to be given more visibility and be more accessible. As a result, BaFin created a division specifically for this purpose. BaFin also redesigned its website to ensure that whistleblowers can contact the supervisory authority easily. In addition to the usual channels, such as e-mail, phone, post or visits in person, there is an electronic whistleblowing system (see info box) that allows users to communicate with BaFin anonymously.

New Market Contact Group

BaFin has also established a new Market Contact Group in the Contact Point for Whistleblowers Division. This Group is the point of contact not only for market participants such as short sellers and analysts but for journalists, too. These and other experts often have valuable information about market activities. The Market Contact Group is the central unit that receives this information and forwards it to the relevant divisions at BaFin. If need be, the Group can also put informants in direct contact with other experts in the competent BaFin divisions.

Protecting whistleblowers

Those who get in touch with the Market Contact Group generally do not require special protection. Whistleblowers, on the other hand, often fear for their jobs if they report inside information to BaFin’s contact point for whistleblowers. The EU Whistleblower Directive, however, which has been in force since December 2019, protects individuals who report breaches of EU law. Key parts of this Directive were incorporated into BaFin’s Whistleblower Regulation (BaFin-Hinweisgeberverordnung – BaFinHwgebV ), which was published in July 2021. The Regulation stipulates that, as a rule, BaFin is not authorised to reveal the identities of whistleblowers without their explicit consent. The protection of whistleblowers is also covered in the German Act Establishing the Federal Financial Supervisory Authority (Gesetz über die Bundesanstalt für Finanzdienstleistungsaufsicht – FinDAG) – or, to be more precise, in the exception under section 4d (5) of the FinDAG in relation to the German Freedom of Information Act (Informationsfreiheitsgesetz – IFG). Under the IFG, the general public has the right to access official information. However, to ensure the protection of those reporting information, this does not apply to whistleblower proceedings.

The protection of whistleblowers goes even further: they cannot be held liable under employment law or criminal law or be required to pay damages if they are working for companies and individuals that are subject to BaFin’s supervision.

Fourfold increase in tip-offs

BaFin’s contact point for whistleblowers was restructured to accommodate the growing number of tip-offs that the supervisory authority receives. Since 2017, the number of tip-offs has increased fourfold (see chart). BaFin processed 629 tip-offs that year. In 2021, this figure increased to a total of 2,281 tip-offs. Last year, around 50 tip-offs were submitted to the Market Contact Group, which was established in August 2021.

Number of tip-offs

@BaFin