BaFin examines employee transactions

Did employees of the financial regulator BaFin speculate without permission in shares of the US companies Gamestop and AMC? The authority is now investigating two suspected cases.

The German financial regulator BaFin is examining possible stock speculation by employees at the authority. In a total of two cases, BaFin is investigating the question of whether the reported private financial transactions are to be classified as speculative, said the Federal Ministry of Finance. Two people are affected. The ministry responded to a request from Fabio de Masi, the left wing’s financial expert in the Bundestag. The deals were noticed during an investigation of employee deals with shares in the US companies Gamestop and AMC Entertainment. The federal government pointed out that Gamestop and AMC are US companies and that shares in these companies are not subject to the BaFin’s trade ban for private financial transactions. These companies are also not subject to BaFin’s corporate supervision.

Purely speculative business is prohibited

Basically, trading in these shares would be permitted for BaFin employees. However, this does not apply if it is speculative business, because such private business has no longer been allowed in the authority since October 16, 2020. If the two employees actually carried out such transactions, this would be unacceptable from the point of view of BaFin and the ministry. At BaFin, “speculative transactions” means short-term trading in the market – for example with derivative financial instruments or shares. When speculating, the focus is on short-term gains, while an investment aims to achieve long-term returns.

Course capers at Gamestop

The The US video game retailer Gamestop’s price capers had kept the stock exchanges in suspense for weeks. There was also speculation with shares in the AMC cinema chain. The value of the shares had increased significantly in some cases. At Gamestop, for example, small investors with concerted purchases forced hedge funds to cancel their bets on a collapse in the price of the securities. That drove the price higher as the hedge funds were forced to stock up on Gamestop stocks. But then profits melted again. Anyone who happened to hit the right time could still rake in massive price gains. These had nothing to do with the company’s economic or business success – it was a pure bet. As a retailer in the games industry, Gamestop has long been under pressure as the business is increasingly shifting to the Internet.