GERMANY: BaFin Publish WpHG Administrative Fine Guideline II – New Numbering of January 2018

Friday February 2 2018

BaFin have published the Guidelines on the Imposition of Administrative Fines for Offences relating to the German Securities Trading Act(Wertpapierhandelsgesetz – WpHG) – updated to reflect the new numbering of January 2018.

With the following Administrative Fine Guidelines from the Securities Supervision Directorate, BaFin, in exercise of its discretion in the area, lays out how it imposes administrative fines following the amendments to the German Act Implementing the Transparency Directive Amending Directive (Gesetz zur Umsetzung der Transparenzrichtlinie-Änderungsrichtlinie – TRL-ÄndRL-UmsG) as well as after the entry into force of Regulation (EU) No 596/2014 (Market Abuse Regulation – MAR) and of the First Financial Markets Amendment Act (Erstes Finanzmarktnovellierungsgesetz) (1st FiMaNoG). The WpHG Administrative Fine Guidelines II supplement the previous WpHG Administrative Fine Guidelines (version dated November 2013) and are valid for offences to which the TRL-ÄndRL-UmsG, the Market Abuse Regulation or the 1st FiMaNoG are applicable. The new numbering of the relevant provisions of the WpHG resulting from the Second Financial Markets Amendment Act (Zweites Finanzmarktnovellierungsgesetz) (2nd FiMaNoG) has been taken into account.

In accordance with section 121 of the WpHG, BaFin is responsible for pursuing and punishing offences relating to the WpHG. Its task is to identify offences against the law and to punish the administrative offences committed. In the process, it ensures that the imposed administrative fine constitutes a sanction which is appropriate, effective and proportionate for the individual case and which has the necessary deterrent effect on the persons committing the breaches (parties concerned) and on third parties.

The WpHG Administrative Fine Guidelines II are divided into a part which provides general information and a part which provides more specific information. The general part describes the scope of the guidelines and elucidates the principles which apply to the assessment of administrative fines against the backdrop of alternative upper limits of administrative fines (Bußgeldrahmen) (fixed, turnover-based, gain-based). As a result of modifications to the statutory requirements, when imposing an administrative fine BaFin will first of all identify the upper limit which is pertinent in the individual case before then undertaking an assessment of the specific administrative fine on the basis of a three-step process. In the more specific part, there are detailed explanations on calculation of the base amounts for the offences against capital market law covered by the guidelines.

While nominal values are shown in the area of application of the fixed maximum fine amounts, in the case of turnover- and gain-based maximum fine amounts the base amounts are influenced by the value judgements contained within the nominal amounts – in particular in the case of especially serious offences.

By contrast, in the case of less serious offences the base amount for turnover- and gainbased maximum fine amounts may differ significantly from this benchmark.

Click on the link above for further information.