Germany’s Federal Financial Supervisory Authority (BaFin) is parting its ways with Elisabeth Roegele, Chief Executive Director of Securities Supervision and Deputy President of the regulator. Late on Friday, the regulator confirmed the personnel change.

Ms Roegele’s departure from the top office at BaFin was dubbed a part of a restructuring of the regulator and a new beginning.

One cannot ignore the fact, however, that this personnel change is executed a couple of days after the regulator confirmed that it suspects one of its employees of engaging in insider trading in Wirecard. BaFin filed a criminal complaint against the employee with the Stuttgart public prosecutor’s office on January 27, 2021.

The employee had sold structured products with the underlying Wirecard AG on June 17, 2020. A day after that, Wirecard AG’s auditor Ernst & Young informed Wirecard AG that no sufficient audit evidence could be obtained so far of cash balances on trust accounts to be consolidated in the consolidated financial statements in the amount of EUR 1.9 billion (approximately a quarter of the consolidated balance sheet total).

Let’s recall that the European Securities and Markets Authority (ESMA) in November published the results of its Fast Track Peer Review which looked into the events leading to the collapse of Wirecard AG and the supervisory response by BaFin and the Financial Reporting Enforcement Panel (FREP).

The Peer Review focused on the application by BaFin and FREP of the Guidelines on Enforcement of Financial Information (GLEFI) and on impediments to the effectiveness of the German two-tier supervisory system for financial reporting in the specific context of the Wirecard case.

ESMA identified deficiencies in the application of the GLEFI in the Wirecard case in several areas.

Some concerned the independence of BaFin from issuers and government. For instance, there was a lack of information about its employees’ shareholdings. This raises doubts on the robustness of BaFin’s internal control system regarding conflicts of interest of its employees vis-à-vis issuers. Also, there is a risk of influence by the Ministry of Finance given the frequency and detail of reporting by BaFin, sometimes before actions were taken.