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A former Perella Weinberg banker received cash and other rewards for sharing confidential information about upcoming deals over a period of 15 years, Frankfurt prosecutors said on the opening day of one of Europe’s biggest insider trading trials.
The banker’s confidant — a 48-year-old German citizen who has been in police custody for the past year — is accused of having traded heavily on the confidential information, allegedly making more than €14mn in profit between 2017 and 2021.
“The defendant obtained special knowledge about potentially rising share prices which he used for transactions on the stock exchange, buying highly leveraged call options and shares of targeted companies,” prosecutors told a panel of five judges on Wednesday.
The case is the result of a sprawling cross-border probe involving searches of premises in Germany, Austria and the UK. Insider trading can be punished with up to five years in jail under German law.
The investigation into the Perella Weinberg partner was dropped when the banker died by suicide two days after his office and home in London were searched, prosecutors told the Frankfurt court. The banker had previously been put on leave by his employer. The former banker and the person on trial in Frankfurt cannot be named for legal reasons.
The charges against the 48-year-old focus on several corporate finance transactions where Perella Weinberg was a key adviser. Those include Fortum’s acquisition of a majority stake in Uniper in 2017 and Covestro’s 2017 share buyback, the 2018 asset swap between RWE and E. ON, the 2019 bidding war over Osram and the takeover of Deutsche Wohnen by Vonovia in 2021.
On several occasions, the banker forwarded confidential internal documents from his Perella Weinberg email account to a personal Yahoo account, the court heard. Prosecutors said he received cash from his friend in return for the tips, and a stake in a Germany-based start-up worth €150,000 that was paid for by his friend.
The charges state that the defendant was frequently tipped off by the banker in advance of public deal announcements and then built big trading positions, subsequently cashing in substantial profits when the shares shot up.
“He possessed very authoritative information which was much more concrete than what was publicly known at the time, and were the basis for investments that yielded certain profits,” the prosecutors told the judges.
The court heard that the alleged insider trading started as early as 2006, when the investment banker was still working at Deutsche Bank. Under German law, cases that happened before 2017 are too old to be criminally prosecuted, but prosecutors may try to seize illicit proceeds linked to older trades.
The defendant — a former communications specialist — on Wednesday declined to comment on the charges against him. His lawyer Felix Rettenmaier told the court that his client would address the allegations in a “comprehensive statement” next week.
Deutsche Bank declined to comment. Perella Weinberg told the Financial Times that it was “assisting the authorities in their investigation” and stressed that neither the bank “nor any of its current employees” were the subject of the investigation or the German court case.