Insiders are aware of circumstances relating to listed companies that are not in the public domain and that could significantly impact the share price – for example, because they have access to this inside information by virtue of their profession. Examples of inside information include the knowledge that a listed company is planning a corporate action, or that is it about to acquire a significant participation.

However, a criminal offence is committed by anyone who makes use of their inside knowledge for their own benefit or on behalf of others and, on the basis of this inside knowledge, buys or sells financial instruments, or modifies or cancels existing orders, regardless of how they came by the inside information. Passing on inside information to another person without authorisation is also prohibited, as is inducing someone to buy or sell securities on the basis of inside information, or recommending that they do so.

A similar ban in relation to cryptoassets has also been in place since 30 December 2024.

Monitoring compliance with the prohibition on insider trading

BaFin investigates indications of insider trading. Two key pieces of legislation in this area are the German Securities Trading Act (Wertpapierhandelsgesetz – WpHG) and the German Cryptomarkets Supervision Act (Kryptomärkteaufsichtsgesetz – KMAG), which give BaFin wide-ranging powers such as the right to demand information from anyone.

Where a suspicion is corroborated, BaFin files a criminal complaint with the competent public prosecutor. Insider trading is punishable by imprisonment of up to five years or by the imposition of fines. If insider trading, unauthorised disclosure of inside information or an inducement/recommendation to buy or sell securities is committed recklessly rather than deliberately, BaFin is authorised to pursue the case itself as an administrative offence. In the case of cryptoasset transactions, it is enough for the offence to have been committed negligently.

Publication requirements such as ad hoc disclosure requirements and, in the case of financial instruments, the requirement to submit notices of managers’ transactions aim to prevent insider trading happening in the first place, since information that is in the public domain can no longer be used for insider trading.