MANIPULATIONS AND STOCK EXCHANGE TRANSACTIONS: THE APPLICATION OF THE GERMAN CRIMINAL CODE AND INSIDER DEALING PROVISIONS
| Published date | 01 January 1995 |
| Pages | 62-69 |
| Date | 01 January 1995 |
| DOI | https://doi.org/10.1108/eb024828 |
| Author | HANS‐GÜNTHER NORDHUES |
| Subject Matter | Accounting & finance |
MANIPULATIONS AND STOCK EXCHANGE TRANSACTIONS:
THE APPLICATION OF THE GERMAN CRIMINAL CODE AND
INSIDER DEALING PROVISIONS
Received: 7th October, 1994
DR
HANS-GÜNTHER
NORDHUES
DR
HANS-GUNTHER
NORDHUES
IS
AN ATTORNEY AT LAW WITH THE GERMAN
LAW FIRM, SIGLE, LOOSE,
SCHMIDT-DIEMITZ
&
PARTNERS (STUTTGART) HE HAS WORKED FOR
INTERNATIONAL LAW FIRMS BOTH DURING
HIS
STUDIES AND) FOLLOWING HIS
EXAMINATIONS HIS SPECIAL INTEREST LIES IN
THE AREA OF INTERNATIONAL FINANCING.
INTERNATIONAL
DEBT
COLLECTION AND
INTERNATIONAL
CRISIS
MANAGEMENT.
HE IS
AN
ASSOCIATE
IN THE
INTERNATIONAL
BUSINESS
TRANSACTIONS
DEPARTMENT.
ABSTRACT
German
law
has
recently taken
an
import-
ant and
long-overdue
step in the battle
against dishonesty
on
the
stock markets
by
implementing
EC
directives
88/627 and
89/592,
respectively
imposing a duty of
publication of certain information and
prohibiting
insider
dealing.
The
resulting
law,
however,
is not a
panacea for
all
evils,
in that
these provisions
do not cover the
case of
deliberate deception
through the
promulgation of false facts on the stock
exchange,
leading to
a
false influence on
price fixing and a
consequent loss
to third
parties. The author
wishes
to
show,
how-
ever,
that
German
law
already
has a
per-
fectly
adequate
provision in the criminal
code
to deal with
such
instances,
although
he is
not
aware
of any
cases where
this
pro-
vision has
been
used to convict an indi-
vidual for causing
losses
to investors in
this
way.
Several shortcomings
can be
seen
to
be
responsible for
this.
Firstly,
the
ability
of the
prosecution
to handle such cases
must
be
doubted.
Secondly,
German
crimi-
nal law
is not
capable
of
dealing with cases
where
this
type
of
interference
with
market
trends was planned and
established
by
teams.
Thirdly, the
relevant provisions
of
the
German criminal code
is
only designed
to deal with individuals and not with
legal
entities.
INTRODUCTION
In recent years there have been
several newspaper articles about
'entrepreneurs' who mislead the
public about the financial situation
of the company which they manage
and in which they hold a substantial
stake. When they discover that their
company strategy is leading them to
62
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