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Regulator reportedly seeking insider trading probe of IKB

German financial markets regulator BaFin has uncovered enough evidence of insider trading at troubled business lender IKB to ask for a criminal investigation, the Wall Street Journal reported on Wednesday.

Regulator reportedly seeking insider trading probe of IKB
Photo: DPA

IKB was an early casualty of a credit squeeze sparked by the collapse of the US market for high risk, or subprime, mortgages in August, and BaFin had been checking into whether people acted on knowledge of its distress before it was made public, according to the paper said.

The regulator said Tuesday that it had referred the case to prosecutors for criminal prosecution, the first time probes into the subprime meltdown have led to a criminal enquiry in the European market. An IKB spokesman declined to comment.

The specialist in lending to small- and medium-sized enterprises was bailed out in August and several times since by rescue packages drawn up in large part by the state-owned development bank KfW, which holds a major stake in IKB.

If insider trading is proven, which is very hard to do, it is typically punished by a fine or a maximum of a few years in jail, the Journal quoted a BaFin spokeswoman as saying.

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Brits in Germany: Have you been affected by the closures of UK bank accounts?

As the end of the Brexit transition period approaches, some UK banks are closing down accounts for their British customers who live in the EU while others are withdrawing services. Are you affected?

Brits in Germany: Have you been affected by the closures of UK bank accounts?
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