Scalping

from Wikipedia, the free encyclopedia

Scalping (English to scalp : " scalping , pulling the skin over your ears") describes the procedure of some fund managers , publishers of stock market letters , business journalists and other people, sometimes called " stock market gurus ", to buy and sell shares of mostly small companies at a low price to then distribute positive reports about the security and recommend it to the public for purchase. As a result of the great demand that has started in this way, the price initially skyrockets until the originators of scalping sell their shares again and reap a price gain that results from the demand of investors tempted to buy. Since the prices often drop sharply again due to the rapid sales of the shares by the perpetrators, investors who have relied on the positive news often suffer high investment losses. In a figurative sense, they are “pulled their fur over their ears”.

Legal position

Until 2003, the legal literature and the courts in Germany predominantly represented the legal opinion that scalping is a criminal insider dealing that can be punished with imprisonment of up to five years or a fine. In November 2003, however, the Federal Supreme Court ruled that this was a prohibited market manipulation under Section 20a of the Securities Trading Act (WpHG). The suspended custodial sentences imposed by the Stuttgart Regional Court against two investment advisors who were involved in a classic scalping case were thus lifted.

The relevant provisions have been in the Market Abuse Regulation since 2016 . Depending on whether the manipulative act of scalping is only suitable to affect the stock exchange or market price or whether it actually does occur, a sanction as an administrative offense ( section 120 (15) No. 2 WpHG) is imposed with a fine up to 15 million euros or 15% of the previous year's turnover can be proven or as a criminal offense ( Section 119 (1) WpHG), for which there is a risk of a fine or imprisonment of up to five years.

The punishment of the administrative offenses or criminal offenses of the WpHG by the BaFin is made considerably more difficult by the fact that the perpetrators can usually not be proven an intent to manipulate prices and the "glossing over" certain securities is covered by the constitutionally guaranteed freedom of the press and freedom of expression. In the USA, on the other hand, there are much stricter laws against scalping, where convicted offenders can be sentenced to prison terms of several years. The US supervisory authority Securities and Exchange Commission (SEC) is authorized to use more drastic investigative methods than the German BaFin. In the US, the principle of "Disclose or Abstain" (applicable disclosure or stay out ). This was quoted by the BGH and also applies in Germany (BGH, judgment of November 6, 2003, file number 1 StR 24/03).

The person making the recommendation has to disclose the conflict of interests in his stock exchange letter / share recommendation or to stay out of the way so that he cannot be accused of scalping. The prohibition of section 20a WpHG was specified in more detail by the Market Manipulation Concretization Ordinance - MaKonV issued on the basis of section 20a (5) WpHG. There it said:

§ 4 Other acts of deception
(1) Other acts of deception within the meaning of Section 20a, Paragraph 1, Clause 1, No. 3 of the Securities Trading Act are acts or omissions that are likely to convince an informed investor about the true economic circumstances, in particular the supply and demand for a financial instrument To mislead a stock exchange or a market and to increase or decrease or maintain the domestic exchange or market price of a financial instrument or the price of a financial instrument on an organized market in another member state of the European Union or another signatory to the Agreement on the European Economic Area .
(2) Signs of other acts of deception are also transactions or individual purchase or sales orders in which the contracting parties or clients or persons closely related to them beforehand or afterwards
1. pass on incorrect or misleading information or
2. Prepare or pass on incorrect, incorrect, distorting financial analyzes or investment recommendations that are influenced by economic interests.
(3) Other acts of deception are also particularly important
1. the securing of a dominant position over the supply of or demand for financial instruments by one person or several persons acting in consultation, with the result that purchase or sale prices of these financial instruments are determined directly or indirectly or that trading conditions that are not in line with the market are created;
2. the use of occasional or regular access to traditional or electronic media through the announcement of a statement or a rumor about a financial instrument or its issuer after positions have been entered into on this financial instrument, without this conflict of interest at the same time as the announcement in an appropriate and effective manner is revealed.

However, it will have to be checked here whether the law regarding the disclosure of a conflict of interest is too vague. The legislature demands an "appropriate" way of disclosing the conflict of interest, but ignores the principle of certainty and the cartoon common among criminal lawyers: "Anyone who behaves inappropriately will be adequately punished."

The Munich Higher Regional Court goes one step further and tries to reinterpret the law a little: "The criminal liability of such market manipulation only does not apply if the existing conflict of interest is specifically and clearly disclosed." Here, "appropriate and effective" becomes "specific and clear". Decision of March 3, 2011 (Ref .: 2 Ws 87-11)

example

A prominent example is Markus Frick . He did not mention his conflict of interest in his share purchase recommendations and sold shares for over 760 million euros. As a result, he was sentenced to 1 year and 9 months suspended.

Other forms of stock market manipulation

Individual evidence

  1. ↑ Federal Court of Justice, judgment of November 6, 2003, file number 1 StR 24/03 (PDF; 123 kB)
  2. ↑ Scalping is a criminal offense . Mirror. November 8, 2003. Retrieved August 25, 2012.
  3. ↑ Market Manipulation Concretization Ordinance - MaKonV (repealed on January 2, 2018)
  4. ↑ ftd.de: "Easy game for Markus Frick" , April 14, 2011 ( Memento from April 15, 2011 in the Internet Archive )
  5. ↑ Markus Frick sentenced to suspended sentence. In: faz.net. April 14, 2011, accessed April 15, 2011 .