In Germany, providing false information or concealing facts in capital investments can constitute investment fraud. Publishing misleading prospectuses carries serious criminal risk, as does negligent conduct in day-to-day business activities. Modern financial instruments, such as cryptocurrencies, online trading platforms, digital investment advice, and automated investment programs, have significantly increased the risk of unintentional criminal offenses.
Determining when business activity crosses into criminal behaviour is often difficult for companies and individuals alike. The criminal classification of investment transactions in Germany is particularly complex, as commercial criminal law, capital market law, and civil liability regulations overlap.
Early consultation with experienced German investment fraud lawyers is essential to avoid serious consequences. As a multidisciplinary law firm, Schlun & Elseven Rechtsanwälte represents clients across industries in all criminal proceedings relating to capital investments in Germany. Our specialist solicitors protect your rights as a defendant, whether defending against unjustified allegations, representing you in complex commercial or criminal proceedings, or safeguarding you from consequences that could threaten your livelihood. We provide both defence in ongoing proceedings and preventive legal advice to help you identify and avoid criminal risks before they materialize.
Investment Fraud in Germany
Investment fraud is regulated in Section 264a of the German Criminal Code (StGB) and constitutes a specific type of fraud. The offense serves to protect confidence in the functioning of the capital market and to safeguard investors from misleading information.
According to Section 264a StGB, guilty of investment fraud is anyone who
provides a large group of people with incorrect, advantageous information about circumstances that are relevant to the decision to acquire shares in a company or to grant a loan to a company,
conceals adverse facts that are essential for making such investment decisions,
uses such information in prospectuses, presentations or overviews intended to promote the acquisition of shares or the granting of loans
All circumstances that may be relevant to the investment decision of a reasonable investor are considered significant. This includes, in particular, information about returns, risks, business activities, financial situations, or use of investment funds. This covers capital investments such as shares, bonds and fund units, but also alternative investments such as real estate investments or cryptocurrencies, provided they are offered to a larger group of people.
It should be noted that providing incorrect or incomplete information is sufficient to constitute investment fraud. However, it is irrelevant whether investors are deceived as a result or whether the investment is actually made. Unlike ordinary fraud under Section 263 StGB, no financial loss is required; even the abstract potential for risk is punishable.
When Do I Need a Lawyer for Investment Fraud in Germany?
If you have any doubts about the accuracy of prospectuses or investment information, you should consult a lawyer specializing in investment fraud as soon as possible. Timely advice can often defuse the situation and, if necessary, enable measures to be taken to avoid criminal prosecution.
The situation becomes considerably more serious if supervisory authorities such as BaFin become aware of your investment and take action against your company. The legal situation becomes particularly complex if your investment has international implications – in this case, the risk of cross-border investigations increases significantly. Professional support is essential at the latest when you receive your first summons as a defendant or witness. The most critical point is reached when your home is searched. Immediate legal assistance is particularly important here, as any careless statement made during the search can be used against you later.
The legal relationships between criminal law and capital market law are extremely complex and require highly specialized legal expertise. It is precisely for these challenging situations that Schlun & Elseven offers comprehensive advice and defense in capital investment criminal law. Our attorneys for capital investment fraud are familiar with the close interconnection between criminal law and capital market law and represent you in all stages of proceedings – from preventive advice to defense in international investigations.
What is the Penalty for Investment Fraud in Germany?
Investment fraud is generally punishable by imprisonment for up to three years or a fine. The penalty depends on the individual case and, in particular, on whether damage has been caused and, if so, how much. Compensation for damages is taken into account as a mitigating factor.
What is Meant by Voluntary Prevention (freiwillige Verhinderung)?
Even after the publication of incorrect information about capital investments, impunity can still be achieved under certain conditions. Section 264a (3) StGB stipulates that the perpetrator will not be punished if he voluntarily prevents investors from actually investing or from increasing their participation based on the deception. The law states that the perpetrator prevents “the performance of the service resulting from the acquisition or increase due to the act.” As long as no service has been performed, exemption from punishment can be achieved through timely and voluntary action. The decisive factor is, however, not the actual success, but the serious and independent effort to prevent the investor’s performance. Since the requirements for exemption from punishment are high and time-limited, an experienced investment fraud lawyer should be consulted at an early stage in such a situation in order to take the appropriate steps in good time.
The challenge lies in taking the right measures at the right time. Specialized legal advice is essential here, as the line between actions that are exempt from punishment and those that are insufficient is often very narrow. Our investment fraud attorneys can assess the chances of success of various courses of action and strategically plan the next steps.
What are the Consequences of a Conviction for Investment Fraud in Germany?
A conviction for investment fraud under Section 264a StGB can have far-reaching consequences that go beyond a fine or imprisonment. Significant legal consequences can arise, particularly for senior company executives. If a prison sentence of at least one year is imposed, this has direct implications for managing directors and board members. Under stock corporation and company law, a conviction for investment fraud is considered a legal ground for exclusion from such management positions. Those affected may not be a managing director or board member of a corporation for five years after the judgment becomes final.
In view of the severe penalties and the possible impact on their professional future, it is advisable to seek legal assistance from an experienced investment fraud lawyer at an early stage.
The Most Common Risks for Allegations of Investment Fraud in Germany
When it comes to investments, even minor inaccuracies or omissions can have serious criminal consequences in Germany. The line between permissible advertising and criminal statements within the meaning of Section 264a StGB is often blurred and difficult for non-experts to recognize. Legal risks that require immediate consultation with an experienced investment fraud lawyer often arise in the following areas in particular:
Prospectus errors
Incorrect or incomplete information in investment prospectuses are among the most common triggers for preliminary investigations into investment fraud. The use of outdated prospectuses when the issuer’s financial circumstances have deteriorated can also constitute a criminal offense.
Cryptocurrency transactions
Trading in digital assets carries a particularly high risk of coming under suspicion of investment fraud. Exaggerated promises of returns, a lack of risk warnings, or unclear technical information can give rise to suspicion of deception.
Suspicion of a pyramid scheme
Business models based on the constant inflow of new investor funds quickly come under suspicion of being illegal pyramid schemes. Even if the investment concept was legitimate at the outset, economic developments or the misuse of funds can transform it into a system that is relevant under criminal law. An early legal review by a lawyer specializing in investment fraud is therefore essential.
Trading advertising
Aggressive or misleading advertising for foreign exchange trading, trading platforms, or financial products can give rise to allegations of investment fraud. Unlawful promises of success or the concealment of significant risks of loss often lead to preliminary investigations. Legal assistance should be sought at the first sign of a possible preliminary investigation.
Real estate investments
There are also significant criminal risks in the area of real estate investments. Excessive valuations, unrealistic return forecasts, or concealing significant property defects can be considered misrepresentation within the meaning of Section 264a StGB.
An Overview: Frequently Asked Questions about Investment Fraud Defense
Investment fraud occurs when a large number of people are given false information that is advantageous to them or when facts that are detrimental to them and relevant to investment decisions are concealed. Unlike normal fraud, no financial loss is required.
Investment fraud is punishable by imprisonment for up to three years or a fine.
Even though the situation can be overwhelming, try to remain calm and contact a lawyer specializing in investment fraud immediately. Do not make any statements without legal assistance.
You should hire a lawyer as soon as you receive your first summons or suspect that you are under investigation. The earlier you have legal representation, the better your chances of a successful defense.
Yes. Managing directors can be held criminally liable if they initiate or approve false or incomplete information about investments or continue to use such information despite recognizable errors. The use of outdated prospectuses can also be punishable if the managing director knew or at least accepted that the information contained therein was no longer accurate. It should be noted, however, that investment fraud under Section 264a StGB is an intentional offense, so mere negligent ignorance is not sufficient.
Common cases include Ponzi schemes, incorrect investment prospectuses, cryptocurrency scams, forex fraud, or the concealment of significant risks in real estate investments.
In the case of investment fraud (Section 264a StGB), no financial loss is required – the misleading information alone is punishable by law. In the case of normal fraud (Section 263 StGB), actual damage must occur.
Practice Group: Our German Criminal Defense Lawyers
Practice Group:
Our German Criminal Defense Lawyers
Contact Schlun & Elseven Rechtsanwälte
Please use our online form to outline your request to us. After receiving your request, we will make a brief initial assessment based on the facts described and provide you with a cost offer. You can then decide whether you would like to engage our services.
