The Frankfurt Regional Court has pronounced the highest prison sentence to date in an insider proceeding.
As the Federal Financial Supervisory Authority (BaFin) announced on Friday, the accused was sentenced to three years and eight months in prison for multiple insider trading.
According to its own statements, BaFin reported the defendant in July and November 2019 and in February 2020 and supported the investigation and court proceedings with various statements and testimonies.
Markus Fruehauf
Editor in Business.
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Between May 2018 and February 2020, the convict traded shares and derivatives from various issuers and invested a total of around 8.5 million euros, mainly before takeover bids.
The inside information came from a former employee of an investment bank.
According to information from the Bloomberg news agency, the tipster is said to have worked for Lazard.
He was sentenced to a suspended prison sentence of one year and six months.
Osram and Axel Springer affected
Prosecutors had accused the two defendants of betting on companies' rising prices before it was known that they would become targets for takeovers.
According to Bloomberg, the transactions include the takeover bid by financial investors Carlyle and Bain Capital for Osram in 2018 and KKR's takeover bid for Axel Springer SE.
BaFin emphasized that the use of insider information is prohibited and punishable.
Insider trading occurs when people have knowledge of insider information and, based on this knowledge, buy or sell shares in the company concerned in order to gain an economic advantage.
It is also forbidden to pass on insider information to third parties without authorization.
The Financial Supervisory Authority classifies any fact that is not publicly known as inside information, which, if it becomes public knowledge, is capable of significantly influencing the price.
Inside information can be the knowledge that a public company is about to take a corporate action or acquire a significant stake.