The ruling was based on the relatively new right of confiscation.
(Photo: imago images / Ralph Peters)
Cologne In the case of the insider trading of a former manager of Union Investment, the main defendant H. has appealed on a point of law. The reason is not the upcoming time behind bars, but the money that H. is supposed to pay. The court demands a payment of 45.31 million euros. The former star manager had earned only 8.3 million euros with his business.
The difference of 37 million euros is a sum that H. will ruin for life. His defense lawyer Sören Schomburg did not want to comment on the revision when asked. But the facts suggest what drives the money manager. Even personal bankruptcy would not improve his situation. Claims from criminal offenses are excluded from the so-called residual debt discharge in insolvency proceedings. Rehabilitation – an important purpose of punishment in Germany – would be extremely difficult for H.
A year ago fund manager H. and his accomplice were almost euphoric: “Limit raised to 128 euros” – “The thing starts immediately” – “Great” – “So let’s get the money, buddy”. From April to September they operated insider trading in securities.
As the responsible manager of mutual funds at Union Investment, H. knew in advance when major acquisitions should be made, which would drive prices. Before they happened, he privately stocked up on call warrants. 55 cases are documented.
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Exchange experts call such a procedure front running – a criminal offense. First the supervisory authority Bafin H. got on the track, then the public prosecutor’s office. At the end of September, the Frankfurt Regional Court sentenced H. to three and a half years in prison.
Questionable bill a case for the BGH
The ruling was based on the relatively new right of confiscation. It follows the principle: “crime must not pay” – crime must not be worthwhile. The so-called gross principle applies. The court does not deduct the money that the fund manager used to buy the securities. Revenue is collected, not profit.
So if a perpetrator stakes ten times ten million euros and makes a million profit on every deal, the court not only demands the ten million profit, but also the hundred million stake. In total, this would be 110 million – eleven times the profit made.
Moritz Rögler also recognized that this calculation is at least questionable. When the verdict was pronounced, the presiding judge of the 29th Large Criminal Chamber at the Frankfurt Regional Court indicated that the amount to be recovered might not have been in the interests of the inventor. A general review by the Federal Court of Justice would make sense.
H. confessed his guilt. A personal crisis drove him to the deeds, said the fund manager in court. He mentioned anger with his employer who denied him higher pay, illnesses affecting his wife and children and high losses with Wirecard shares. This mixture led to entering into insider trading.
But his regrets do not go so far that he would like to pay 37 million euros more than he earned with his actions. So the act and the judgment against the Union Investment Manager develop into a case for legal history. Criminal lawyers consider it possible that the right of confiscation will be fundamentally revised.
More: Why the fund manager was sentenced to three and a half years in prison and heavy payment