Continuing fallout from the Wirecard scandal has led Germany’s finance minister to oust the top two officials at the country’s financial regulator, the Federal Financial Supervisory Authority (BaFin).
BaFin President Felix Hufeld and Deputy President Elisabeth Roegele will be leaving the agency as part of a reorganization announced by German Finance Minister Olaf Scholz on Jan. 29.
“The Wirecard AG scandal has revealed that the German financial supervisory authority needs a reorganization in order to be able to fulfill its supervisory function more effectively,” Scholz said in a translated statement. The Finance Ministry and Hufeld “came to the mutual decision that, in addition to organizational changes, there should also be a new start in terms of personnel at the top of BaFin.”
The moves come after increasingly intense calls for the resignations of BaFin’s leadership, following reports the agency failed to act on numerous red flags regarding accounting fraud at Wirecard. The company was eventually found to have booked more than $2 billion worth of revenue that did not exist.
In the aftermath, former Wirecard CEO Markus Braun was arrested in June 2020 but later freed on $8 million bail. Jan Marsalek, Wirecard’s former chief operating officer, is still at large and could be on the run. The two are now also facing criminal complaints in Austria over allegations of market manipulation. In Germany, two more unnamed Wirecard executives also have been arrested.
Neither the Finance Ministry nor BaFin announced when Hufeld would step down, but Reuters reported two people with knowledge of the situation said he would stay on until March 31 “to ensure an orderly handover to new leadership.”
BaFin also filed a criminal complaint to the public prosecutor’s office in Stuttgart against an employee on suspicion of insider trading, according to a Jan. 28 press release from the agency. Upon discovering the insider trading activity, BaFin suspended the employee and initiated disciplinary proceedings.
BaFin had allowed its employees to trade in securities of companies it regulated until it introduced “stricter compliance rules for the personal securities transactions conducted by its staff members” in October 2020, the agency said. “Speculative financial transactions, i.e. short-term trading with derivative financial instruments or shares, for example, have since been prohibited.”
Key quotes: In the Finance Ministry statement, Hufeld thanked the Finance Ministry and BaFin for the trust they placed in him during his eight years at the agency, including six years as president.
“The BaFin has thereby significantly improved and won in many ways relevant. Now there are other tasks to tackle, and I wish my successor the best for mastering them,” he said.
In a separate translated statement, Roegele said, “With a view to the upcoming reorganization of the Federal Financial Supervisory Authority, I decided, in agreement with the (Ministry of Finance), to make my position available in order to enable a new start in terms of personnel.”