Ad hoc disclosure
In Germany, stock corporations listed on the official market and regulated market – but not yet on the over-the-counter market – are required to inform the public about important changes in the financial or economic situation of their business area (corporate event). This requirement under Section 15, Paragraph 2 of the German Securities Trading Act (WpHG), which serves to promote market transparency, is monitored in detail by the German Federal Financial Supervisory Authority (BaFin) – also with regard to any abuse through mealy-mouthed statements. – An ad-hoc fact subject to disclosure must be communicated and published immediately (i.e. without culpable delay). This must be done irrespective of stock exchange trading hours. Ad hoc disclosures made intentionally or through gross negligence, incomplete or incorrect shall give rise to a liability for damages. – However, statements made by board representatives outside of ad hoc announcements, especially at annual general meetings, in the press, and on radio and television, have so far not been subject to sanctions. – It is in a company’s own interest to publish bad news, especially losses, immediately. This is because – as has been shown several times, especially in the course of the subprime crisis – sooner or later this news becomes public and, as long-lasting rumors, damages a bank in particular far more than a prompt, clear loss announcement. – See shareholder letter, disclosures, veiled, delisting, decision usefulness, frontrunning, information deferral, rumor scattering, price fraud, price manipulation, Market Abuse Directive, market manipulation, pervasive constraint, public disclosure, publicity, situational, push, damages liability, salami tactics, voting rights disclosure, sales figures, false, disclosure, prompt, scalping, circumstances, valuation, consumer complaints, predictions, advertising restrictions, whistleblower. – Cf. the list of addresses for electronically disseminated ad hoc announcements in the 2001 Annual Report of the Federal Supervisory Office for Securities Trading, p. 34, BaFin’s 2002 Annual Report, p. 158 ff, BaFin’s 2003 Annual Report, p. 192 ff, BaFin Annual Report 2004, p. 174, p. 187 (drastic penalties), p. 192, p. 196 ff. (cases), BaFin Annual Report 2005, p. 166 ff. (p. 167: overview of ad hoc disclosures since 2003), BaFin Annual Report 2006, p. 175 ff. (recent legal developments; infringement proceedings), BaFin Annual Report 2007, p. 184 ff. (p. 185: overview of ad hoc disclosures since 2003), BaFin Annual Report 2008, p. 164 ff. (statistics 2004 to 2008), BaFin Annual Report 2009, p. 189 f. (a company may be exempted from ad hoc publicity if the protection of its legitimate interests so requires, no misleading of the public is to be feared, and the company can guarantee the confidentiality of the inside information; BaFin’s revised issuer guide), BaFin Annual Report 2010, p, 206 ff. (current status of supervision; legal clarification of the „stretched process“ in which a circumstance is to be realized via several intermediate steps), BaFin Annual Report 2012, p. 189 f. (demarcation problems with regular publicity; ECJ rules on Daimler case and upholds BaFin) BaFin Annual Report 2013, p. 191 (fine for failure to issue ad hoc disclosure in a case where results were significantly better than expected) and the respective BaFin Annual Report, chapter „Supervision of Securities Trading and Investment Business.“
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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
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