Frankfurt The financial regulator Bafin has imposed a fine of EUR 498,000 on Landesbank Baden-Württemberg (LBBW). It is about a failure to report suspicious activity with a view to insider trading.
The Bafin had already imposed the penalty two weeks ago. LBBW failed to inform the supervisory authority “immediately of the reasonable suspicion that an order exists that represents insider trading with regard to a financial instrument”.
According to its own statements, the bank accepts the fine. “The allegation of insider trading was not directed against an employee of the bank, but against a customer,” LBBW said. “We cannot give any further details due to bank secrecy.”
The fine against LBBW is extraordinary and suggests that the Landesbank committed a serious failure. In addition, Bafin’s justification indicates that it sees fundamental deficiencies in handling suspicious transactions at LBBW, regardless of the sanctioned case. LBBW, based in Stuttgart, is the largest German state bank.
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Since Bafin boss Mark Branson took office in the summer of 2021, the financial regulator has increasingly publicly denounced deficiencies in banks and other financial service providers. Since then, it has regularly provided information about higher capital surcharges for individual banks, the use of special officers, searches or fines imposed.
According to Branson, this is a conscious decision: “It’s not about pillorying institutes,” he said at a Bafin press conference in the spring. “But it is important that all institutes see what our expectations are: what works and what doesn’t.”
After the Wirecard scandal, it was also a concern of the legislator that the Bafin became more transparent. In addition, public announcements about penalties for the entire financial sector could have a “general preventive effect,” said Branson.
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