Sunday April 11, 2021
Unauthorized speculation in stocks
Bafin checks employees for game stop deals
The price capers of the Gamestop share cause a stir on the trading floor for weeks. Business with the papers of the video game dealer has been banned for employees of the financial regulator for months. The Bafin is now examining two suspected cases in its own ranks.
The financial supervisory authority Bafin investigates in two cases whether own employees have carried out unauthorized speculative share transactions. The events came to light during an investigation into employee transactions with shares in the US companies Gamestop and AMC Entertainment. This emerges from a response by the federal government to a request from the left-wing financial expert in the Bundestag, Fabio de Masi.
The capricious prices of the US video game retailer Gamestop kept the stock exchanges in suspense for weeks, as did the speculation about the papers of the AMC cinema chain. The value of the shares had increased significantly in some cases. At Gamestop, for example, small investors with concerted purchases forced hedge funds to cancel their bets on a fall in the price of the securities. This brought the share significant price gains in some cases. The federal government pointed out that Gamestop and AMC are US companies and that shares in these companies are not subject to the Bafin’s trade ban for private financial transactions. These companies are also not subject to the supervision of the Bafin.
In a total of two cases (two people), the Bafin checks whether the reported private financial transactions can be classified as speculative, according to the answer from the Ministry of Finance, which is available to the German Press Agency. From the point of view of the Bafin and the Ministry, this would be unacceptable. Speculative private transactions have no longer been allowed for Bafin employees since October 16, 2020.
In the period between September 1, 2020 and February 10, 2021, according to the government response, four employees bought or sold Gamestop shares 23 times. Four employees also traded AMC shares six times (as of March 22, 2021). The business had been reported by employees. The examination has not yet been fully completed, “according to the current status, there are no signs of insider trading,” it said. During the period under review, the first wave of the spectacular exchange of blows between well-organized small investors and hedge funds occurred on the stock exchanges, which initially drove the prices of these stocks up sharply.
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