Companies may find it worthwhile to take legal action against fines imposed by the German Federal Financial Supervisory Authority (BaFin). An appeal against the fine notice often leads to a significantly greater reduction than an out-of-court "deal" with BaFin. The management should check which procedure is in the best interests of the company.
BaFin is increasingly imposing fines on listed companies for violating the provisions of the German Securities Trading Act or the Market Abuse Regulation. Often, amounts in the millions are set for even minor offences. The amount of the fines also varies greatly from company to company for the same offence. This is due to the fact that BaFin bases the amount of the fines on the market capitalisation of the respective companies within the range stipulated by law. As a result, companies with a low market capitalisation have to pay much less for the same infringement than companies with a high market capitalisation.
Experience has shown that many companies agree to a "settlement" with BaFin as part of the fine proceedings. BaFin regularly grants discounts of around 30% on the threatened fine. In return, however, BaFin expects a waiver of legal remedies.
However, practical experience shows that a significantly greater reduction can be achieved by lodging an appeal against the BaFin's fine notice in the subsequent court proceedings, which take place before the Frankfurt am Main Local Court. In such proceedings, the court has to deal with a very complex regulatory matter that is largely unknown to it and is therefore often interested in a quick resolution. In addition, the court may waive the grounds for its judgement in the event of a court settlement (Section 77b OWiG). The public prosecutor's office participating in the proceedings regularly raises no objections to such a procedure.
In addition, there are cases in which BaFin interprets supervisory regulations too broadly or the alleged facts that are subject to a fine are disputed. In such cases, it is advisable to seek a complete cancellation of the notice in question - if necessary, by means of a legal appeal to the Higher Regional Court of Frankfurt am Main.
