Banking and capital markets criminal law

The area of banking and capital markets criminal law is naturally, but not solely, of great relevance in the financial hub that is Frankfurt am Main. This is an area of law that is subject to ever stricter rules and regulations, both in terms of the actual criminal provisions as well as the wide range of obligations that precede criminal liability.

Capital markets criminal law centres on the penal provisions of the German Securities Trading Act, namely insider trading and market manipulation. Banking criminal law also includes supplementary penal provisions that apply directly to the responsible executives of a bank, such as sections 54 et seq. of the German Banking Act. That said, the provisions of the Criminal Code are again of greater relevance in practice. For instance, if a bank’s own management is subject to the allegation of having caused financial losses for the bank, be it by supposedly making overly liberal lending decisions or ostensibly failing to appropriately risk-manage loans, this may result in a criminal charge for embezzlement under section 266 of the Criminal Code.

However, if, on the other hand, a bank is unlawfully enriched through the sale of financial products – or the mere intention to procure such enrichment exists – the bank’s management may be charged with fraud under section 263 of the Code or investment fraud under section 264a of the Code. The less transparent the actual product is to the lay person, the greater the risk of criminal charges.
Likewise, customers are also exposed to specific criminal risks when entering into banking or capital markets transactions, with the provisions of section 263 (fraud) and section 265b (credit fraud) of the Code being of particular relevance.

The supervisory authorities that trigger criminal investigations by reporting alleged offences play a prominent role, both procedurally and practically, as they influence the investigative proceedings: firstly, by virtue of their subject-matter expertise and secondly, by putting forward their punitive expectations.