Erscheinung:21.06.2013 | Topic Market manipulation Market manipulation: unauthorised telephone orders result in long terms of imprisonment
On 14 June 2013, the Regional Court (Landgericht) of Frankfurt/Main sentenced the first defendant to four years and four months imprisonment for market manipulation and serious fraud in collective investigation proceedings (Sammelverfahren) involving unauthorised telephone orders. In May 2012, the convicted party had initiated unauthorised telephone orders for shares in Adinotec AG valued at over EUR 800,000. The proceedings stem from an investigation by the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht – BaFin) into market manipulation and preliminary investigations conducted by the Frankfurt Public Prosecutor's Office and the Hesse State Office of Criminal Investigation (Landeskriminalamt).
Unauthorised telephone orders involve persons contacting credit institutions, passing themselves off as their customers and then placing orders under other persons' securities accounts to purchase shares traded on the regulated unofficial market (Freiverkehr), which are generally illiquid. These persons commonly identify themselves to credit insti-tutions using information obtained from the actual account holders, such as the securities account number or information about the shares in the trading portfolio. In many cases, offenders are able to obtain such personal information by calling investors under the pre-tence of recommending shares and then telling them that they need account statements or copies of their ID to bill their commission. Offenders then exploit the artificially created demand by selling shares purchased previously at a low price at a profit.
BaFin reported a total of 15 cases of unauthorised telephone orders involving more than 40 securities. Orders valued at EUR 7.5 million had already been executed. Orders for a further EUR 4.1 million were thwarted when the credit institutions were able to recognise in time that the callers were not the actual account holders.
The decision of the Regional Court of Frankfurt brings the first proceedings to a close, though the judgment is not yet final and binding. Investigations continue in further cases.
