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Frankfurt prosecutors have charged a 48-year-old German citizen with insider trading in one of the country’s largest such cases, public prosecutors told the Financial Times, as German authorities seek to crack down on the practice.
The defendant, who allegedly received confidential information about forthcoming M&A deals from a partner at boutique investment bank Perella Weinberg, is accused by prosecutors of having used inside information in 20 different trades between 2017 and 2021.
The defendant, who has been in pre-trial custody since January, is alleged to have made at least €24mn in profits. Some earlier deals, where prosecutors allege he also relied on insider information, fall outside the statute of limitations.
The Perella Weinberg banker, who worked on mergers and acquisitions in its London office, was found dead days after police raided the bank’s premises in the UK and Europe. He had been put on leave by the bank after the raids.
People familiar with the case said the men had been longtime friends and were in regular contact.
The probe, which involved Germany’s financial watchdog BaFin, Frankfurt state prosecutors and federal police, highlights the increased awareness among German authorities of insider trading and market manipulation.
This is the third big insider trading scandal involving a large financial institution in Germany since 2021.
Last year a former Lazard investment banker received a suspended jail sentence after sharing confidential information with a trader.
In 2021, a former senior fund manager at Union Investment was sentenced to three-and-a-half years in jail and ordered to repay almost six times the €8mn in profits he made from insider trading. That case is currently being retried in Frankfurt after Germany’s highest court found procedural flaws.
Insider trading can be punished with up to five years in jail under German law.
Perella Weinberg has become one of the leading M&A advisers in Germany. It has acted on deals including the €29bn acquisition of Deutsche Wohnen by Vonovia in 2021, the €4.5bn takeover of Osram in 2019 and the €59bn asset swap between RWE and Eon in 2018.
After the raids in January, the bank told the Financial Times that it was “assisting in an investigation by German law enforcement authorities”, stressing it was not the subject of the investigation itself and that there was “no suggestion of wrongdoing on the part of the firm.”
Charges were filed in July but have not previously been made public. No date has yet been set for a trial, but people familiar with the case said it was likely to start early next year.
A lawyer for the 48-year old defendant declined to comment.