MANIPULATIONS AND STOCK EXCHANGE TRANSACTIONS: THE APPLICATION OF THE GERMAN CRIMINAL CODE AND INSIDER DEALING PROVISIONS

Abstract

German law has recently taken an important 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, however, that German law already has a perfectly adequate provision in the criminal code to deal with such instances, although he is not aware of any cases where this provision has been used to convict an individual 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 criminal 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.

Citation

NORDHUES, H. (1995), "MANIPULATIONS AND STOCK EXCHANGE TRANSACTIONS: THE APPLICATION OF THE GERMAN CRIMINAL CODE AND INSIDER DEALING PROVISIONS", Journal of Financial Regulation and Compliance, Vol. 3 No. 1, pp. 62-69. https://doi.org/10.1108/eb024828