The prominent case of the resignation of the Daimler director Schrempp raises the question, at what stage information becomes insider information according to Section 13 of the WpHG old version and therefore result in the obligation to an ad-hoc disclosure.
A model plaintiff sued the Daimler AG (Stock Corporation) within the scope of the KapMuG (Kapitalmarktmusterfeststellungsverfahrens, Model Case Procedure Act for Investors). He claimed damages for the allegedly delayed disclosure of insider information.
The chairman of the Daimler AG (Schrempp) considered, in the time between May and July 2005, to resign from his position ahead of time. Several people from his work environment, especially the board members, gained knowledge of this at different times.
The OLG Stuttgart decided (model case decision of 22 April 2009, 20 Kap 1/08, DE:OLGSTUT:2009:0422.20KAP1.08.0A) that in a case of a protracted process aiming towards a future event, a sufficient probability, that the event will actually occur, is needed for the classification as insider information. Therefore, it is not a question of the preliminary decision and preparation process. The insider information initially came into existence at the end of July, with the resolution of the presidential committee of the board the evening before the board meeting, which decided on the early withdrawal of the chairman from his office.
The Federal Court of Justice requested a preliminary ruling of the ECJ on the question, if, for the purposes of applying point 1 of Article 1 of Directive 2003/6 of the European Parliament and of the Council of 28 January 2003 on insider dealing and market manipulation (market abuse) and Article 1(1) of Commission Directive 2003/124, of 22 December 2003 implementing Directive 2003/6 as regards the definition and public disclosure of inside information and the definition of market manipulation, intermediate steps in a protracted process, which already exist or have already occurred and which are connected with bringing about the future circumstance or event, can be precise information within the meaning of the mentioned directives.
The ECJ decided (judgment of 28 June 2012, C-19/11, EU:C:2012:397), that the mentioned directives are to be interpreted in such a way, that in the case of a protracted process intended to bring about a particular circumstance or to generate a particular event, not only may that future circumstance or future event be regarded as precise information within the meaning of those provisions, but also the intermediate steps connected with bringing about that future circumstance or event.
Appropriately, the Federal Court of Justice decided to reverse the judgment by the OLG Stuttgart and refer the case back to the OLG. The Federal Court of Justice clarified, that in the case of a protracted process, not only the circumstance or event at the end of the process, but also the intermediate steps necessary to achieve that circumstance or event can be insider information. In the Schrempp case the constituent facts of insider information could have been fulfilled long before the meeting of the presidential committee of the supervisory board. A final legal decision was not made in these proceedings, as the parties agreed on a settlement.
A legislative clarification on qualifying protracted processes, like amending Section 13 of the WpHG old version, did not occur on a national level. Meanwhile, Section 7 (3) of the MAR (Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation)) as a direct applicable European regulation, illustrates that intermediate steps can be classified as insider information.
On the Geltl/Daimler/Schrempp case see also Möllers, Juristische Methodenlehre, 2nd ed., Munich 2019, § 7 mn. 42 et seq. Generally on the methodology of European law see Möllers, Juristische Methodenlehre, 2nd ed., Munich 2019, § 12.