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High penalties for insider trading in Gerry Weber shares

W.In January 2019, four men from the Braunschweig area had to pay high fines due to the criminal insider trading in shares of the Gerry Weber fashion group. This is reported by the Westfalen-Blatt, published in Bielefeld. The Braunschweig public prosecutor was convinced that the men knew about the impending application for insolvency in self-administration and used this knowledge by speculating on a price slump.

According to the public prosecutor, a 69-year-old custodian from Braunschweig and his 71-year-old agent avoided a loss of 1.2 million euros by selling shares early, said the first public prosecutor Christian Wolters, according to the Westfalen-Blatt. In addition to skimming off this benefit, the account holder has to pay a fine of around 800,000 euros, and the authorized representative 5,000 euros.

Very noticeable price movements

The other proceedings are also to be closed against payment of fines. In the other case, according to the public prosecutor’s office, two men, each 28 years old, had bought warrants to sell shares in the fashion company on January 24th and 25th – and thus bet on falling prices. A short time later they had sold the papers at a profit. One of the two is supposed to pay a further 16,000 euros in addition to the profit of 14,000 euros, the other the proceeds of 13,000 euros.

The price movements around the day of the bankruptcy filing had been extremely noticeable. The day before, around noon, it had suddenly plummeted by 13 percent to an all-time low for no apparent reason. The F.A.Z. had already expressed the suspicion at that time that a criminal offense could exist. The company itself did not want to comment on the noticeable price movement.

The financial supervisory authority Bafin investigated the noticeable price movements and finally filed a criminal complaint. In August 2019, there were house searches, whereby data carriers were primarily seized as evidence, said Wolters. Their evaluation had substantiated the suspicion.

It was common knowledge at the time that the women’s fashion group from Hall was in severe turbulence. In autumn 2018 he commissioned a restructuring report, in November banks deferred claims until the end of January 2019. However, negotiations on a financing concept were about to fail – and this information had apparently leaked to the four men.

If the four accused pay the sentences imposed with the consent of the regional court by the end of May, the criminal proceedings will be finally abandoned and the men will continue to be regarded as having no criminal record. Otherwise they face up to five years imprisonment in trials. The first payments have already been received. While the portion attributable to the pecuniary benefits flows into the Lower Saxony state treasury, the fines benefit non-profit institutions.

Gerry Weber has been back on the stock exchange since October after the bankruptcy proceedings were concluded at the beginning of the year, albeit with a new listing. The approved 1.2 million shares come from two capital increases as part of the restructuring and to a small extent from shares for the possible conversion of an outstanding convertible bond.

The new owners are the financial investors Whitebox, Robus Personal-Financial.com and J.P. Morgan Securities, with Whitebox and Robus each accounting for 42 percent.

In the third quarter, the company has long had its first profit of 2 million euros. However, the numbers are difficult to compare. Gerry Weber had already cut 1,000 jobs during the insolvency phase, again this year 200. Of almost 800 self-operated branches, 593 shops are left, and the number of sales areas operated by partners has also decreased.

As a result, sales in the first nine months of the year fell from EUR 368 million to EUR 227 million compared to the same period last year. The corona pandemic burdened sales with around 73 million euros.

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