Branson wants to restrict Bafin people’s stock deals

The successor to the presidential post of financial supervision wants simple and strict rules. Because Bafin employees recently caused outrage with securities transactions relating to the shares of the scandalous company Wirecard.

Mark Branson, the designated new Bafin President

DHe designated President of the Federal Financial Supervisory Authority (Bafin), Mark Branson, sees a need for action in stock transactions by the employees of his authority. At a public hearing in the Bundestag Finance Committee, the head of the Swiss Financial Market Authority, who was still in office, said on Wednesday that clear rules and bans could help. “It must be clear to an employee what is forbidden and what is allowed. There shouldn’t be too much complexity. ”Simple rules are also associated with a“ certain rigor ”.

His predecessor at the top of Bafin, Felix Hufeld, had to resign after the supervisory authority reported one of its employees on suspicion of insider trading in Wirecard shares. At a hearing before the Bundestag committee of inquiry into the Wirecard scandal, Bafin Executive Director Béatrice Freiwald, who is responsible for internal administration and law, admitted on Monday that Bafin employees reported twice as many share transactions in 2020 than in the previous year. She spoke of probably 18,000 reported deals.

The final sample evaluation in 2019 revealed six irregularities, which Bafin’s compliance department is now complying with. The sample evaluation is not yet available for 2020. Earlier this week it became known that Bafin employees had also traded shares in the American video game retailer Gamestop and the cinema chain AMC Entertainment. The two stocks were exposed to high price fluctuations after small investors agreed to buy together online and thus put hedge funds under pressure.

Since mid-October, the approximately 2,700 Bafin employees have had stricter rules for share transactions, after they were previously much laxer than at the Bundesbank or the EU stock exchange and securities regulator Esma. Now the Bafin employees are no longer allowed to trade in shares of financial corporations that have their headquarters or a branch in the EU. In addition, they may not be companies that are subject to the supervision of the Bafin. After all, the stock deals must not be speculative. This means that the securities may not be bought and sold in less than 30 days.

Branson, who will take office as Bafin President on August 1, believes that liability of the financial supervisory authority in the event of gross negligence would make sense. By this he understands “clear cases of abuse of office”. However, the fear of liability should not paralyze the supervisory staff. The Leibniz Institute for Financial Market Research Safe’s demand to make Bafin more independent from the Federal Ministry of Finance can, in his opinion, also be achieved by revising the principles for cooperation between the authorities and the ministry.

“It doesn’t matter where the agency is embedded, it matters that independence is lived,” said Branson. He sees the current difficulties of the supply chain financier Greensill and the hedge fund Archegos as an indication of the great dangers that exist in the current market environment. Investors are ready to take high risks in view of the low interest rates.