Securities Trading Act
The MTU Electricity/Gas analyses the electricity and gas markets for any signs of violation of the market abuse prohibitions laid down in the German Securities Trading Act (WpHG).
In respect of trading in energy wholesale products, violations of the prohibition on insider trading and market manipulation (sections 14 and 20a WpHG) are taken into account if financial instruments are involved that fall under Article 9 of the EU Market Abuse Directive. For instance these could be gas future contracts.
Insider trading is prohibited under section 14 WpHG. Insiders are those persons who have received significant price-relevant, non-public facts (inside information) due to their work or in any other way. This could be a planned capital measure or the acquisition of significant shareholdings. People who use inside information for their own benefit or for that of a third party to buy or sell securities (insider securities) make themselves liable to prosecution. It is likewise prohibited to make inside information available to someone else without the authority to do so or to recommend to someone that they should buy or sell a security on the basis of inside information.
Market manipulation is prohibited under section 20a WpHG. This includes any transactions that generate false or misleading signals affecting the supply of, demand for or price of a financial instrument. Other deceptive acts may also be construed as market manipulation if they have the potential to influence the price of a financial instrument. Primarily these acts include wash trades (simultaneous buying and selling of a security) or pre-arranged trades.
Role of BaFin
If, in its analysis, the MTU Electricity/Gas determines a suspicion of insider trading or market manipulation, it will inform the Federal Financial Supervisory Authority (BaFin). BaFin, which is responsible for monitoring WpHG violations, will then investigate in more depth. Should the suspicion be confirmed, BaFin will file a complaint with the competent public prosecution office or will pursue the offence further as an administrative offence. If inside information is used for buying or selling insider securities, this is a criminal offence. The same applies if primary insiders (e.g. the directors or supervisory board members) disclose inside information without authorisation or give recommendations on buying or selling financial instruments on the basis of inside information.
In the case of secondary insiders, that is to say, persons who unlike primary insiders do not have any special connection to the company yet still gain knowledge of the inside information (e.g. employees who happen to overhear a conversation), BaFin may pursue the unauthorised disclosure of inside information or the recommendation to buy or sell as an administrative offence punishable by fine.
Market manipulations can also fall under criminal offences or administrative offences. This depends on whether the manipulative act actually did affect the market price. Manipulations that affect price are criminal offences; if there is no price effect, they are administrative offences.
Insider trading and market manipulation can be punished by imprisonment of up to five years, by financial penalty or by fines of up to €1 million.
More information about market abuse prohibitions under WpHG can be found on BaFin's web pages.