Thursday, January 28, 2021
Possible insider trading
Bafin employees reported in the Wirecard case
When trading in Wirecard papers, an employee of the financial supervisory authority is said to have used insider knowledge. He is released and has to face disciplinary proceedings. While Finance Minister Scholz speaks of the need for reform, the call for a new Bafin top is loud.
The spectacular accounting scandal surrounding the former Dax group Wirecard could now also have legal consequences for financial supervision. The Bafin reported one of its employees on suspicion of insider trading. In the room there is the allegation that he could have used inside knowledge to do business with Wirecard papers. Finance Minister Olaf Scholz sees a need for reform at the supervisory authority, which is subordinate to his ministry. In the next few days he wants to present the results of an investigation into the reorganization of the Bafin.
The financial supervisory authority has been examining private stock market transactions of its employees for months, in which the price of the now insolvent scandalous company Wirecard played a role. As recently as November, Bafin boss Felix Hufeld stood in front of his employees. Up until then, there had been no evidence that employees trading Wirecard shares had used a possible information advantage for private gain, he said. 510 private transactions by 85 employees related to Wirecard were reported.
The now reported employee sold structured products with the underlying Wirecard AG on June 17, 2020, the supervisory authority explained. These include certificates. A day later, the fintech company admitted a balance sheet hole of 1.9 billion euros. Wirecard filed for bankruptcy at the end of June. The financial supervisory authority discovered the suspicion against the employee according to their own statements as part of the special evaluation. The employee was immediately released and disciplinary proceedings opened.
Scholz spoke of a "serious incident". This shows how correct the new rules for share trading by Bafin employees are. "And it shows the need for reform that exists there," he said. The private financial transactions of Bafin employees are to be severely restricted, but the Bundestag has yet to approve the new rules. The Bafin itself had tightened its rules for the private securities transactions of its employees in mid-October 2020. Speculative financial transactions, i.e. short-term trading, for example, with stocks, are no longer possible, according to the information.
FDP calls for new Bafin leadership
Ultimately, it is not about the misconduct of an individual who may have turned his professional knowledge into money, said FDP finance politician Florian Toncar. The case attacks "the trust in the supervision at heart". He asked Scholz to start over at the top of the Bafin. "This is the only way to restore the authority of the authority in the foreseeable future." The left's financial politician, Fabio De Masi, also sees the need for stricter rules in German authorities – including for ministries and the Bundestag. The Green MP Danyal Bayaz emphasized: "But better rules do not help us much if nothing fundamentally changes in the supervisory culture at the top."
The billions in the balance sheet scandal surrounding the previously up-and-coming tech company Wirecard had shaken the financial scene and politics badly. The Munich public prosecutor's office assumes that the company has shown fictitious profits for years without auditors and supervisory authorities noticing. Numerous shareholders made heavy losses when Wirecard filed for bankruptcy after the scandal exploded and the shares crashed. An investigative committee of the Bundestag has even dealt with the case.
The former Chief Financial Officer of Wirecard denied any involvement in the alleged fraud in the billions before this committee on Thursday. The controversial trust accounts were not in his area of responsibility. Rather, the Wirecard manager Jan Marsalek, who has since gone into hiding, was responsible.
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