Extract taken from 'The Securities Ligation Review – edition 5'
Public enforcementi BaFin
BaFin supervises and enforces compliance with the requirements of all security-related supervisory rules (see Section I.i) and may issue orders provided that they are appropriate and necessary. For example, pursuant to Section 4(2) WpHG, BaFin may temporarily prohibit the on-exchange trading in individual shares to the extent that this is necessary to enforce the prohibitions or requirements pursuant to the WpHG (e.g., market manipulation).
To this effect, BaFin may request anyone to provide information, present documents and surrender copies as well as summon and question persons. During usual business hours, employees of BaFin must be given access to the property and business premises.
BaFin can publish on its website decisions that it has taken against companies for not complying with the provisions of the WpHG, provided that such decisions are legally binding, the authority deems the publication suitable and necessary and it would not significantly endanger the financial markets or lead to disproportionate damage to the parties involved and the publication (Sections 123 to 126 WpHG).ii Sanctions, prosecutor and cooperation
In the event of a deliberate or grossly negligent breach of supervisory rules, German law provides for two classes of sanctions: criminal penalties for serious breaches and administrative fines for minor cases. The competent authority for the imposition of administrative fines is BaFin, while public prosecutors are responsible for the prosecution of criminal matters. Both authorities work closely together. With the implementation of MAD II and MiFID II, administrative fines have been increased substantially.
BaFin has to report without undue delay to the competent public prosecutor information on facts leading to the suspicion that a criminal offence may have been committed. It may transfer personal data of relevant persons who are under suspicion or who are contemplated to act as witnesses to the public prosecutors to the extent that this is necessary for purposes of criminal prosecution.
In return, the public prosecutor informs BaFin of the commencement of any investigation proceeding in respect of criminal offences. If experts are required during the investigation proceedings, employees of BaFin with the relevant knowledge can be called upon. If the public prosecutor considers discontinuing the proceedings, it is required to take the view of BaFin into consideration.