BaFin Fines Oldenburgische Landesbank for Compliance Failures

Key Takeaways

• Fine Imposed: BaFin fined Oldenburgische Landesbank AG €910,000 ($992,000) for multiple breaches of the German Securities Trading Act (WpHG) between 2020 and 2021.
• Client Asset Safeguards: The bank’s IT controls failed to automatically block sell orders when delivery of purchased securities was delayed, exposing uninvolved clients’ holdings to risk.
• Transparency Failures: OLB did not properly inform clients of individual cost components when selling linked products, such as investment funds combined with deposit account vouchers.
• Undisclosed Inducements: Between 2020 and 2021, OLB failed to disclose the nature and amount of third-party inducements as required under the WpHG.
• BaFin’s Warning: The regulator reiterated that investment service firms must uphold strict governance, transparency, and client protection standards—or face substantial penalties.

Deep Dive

Germany’s financial watchdog, BaFin, has fined Oldenburgische Landesbank AG €910,000 ($992,000) after uncovering multiple compliance and control breaches under the German Securities Trading Act (WpHG) during 2020 and 2021.

The regulator found that OLB’s systems and governance controls failed to protect client assets and uphold key transparency obligations, issues that point to broader weaknesses in risk management and oversight.

BaFin said the bank did not have sufficient IT safeguards in place to ensure client ownership rights in securities trading. Specifically, OLB failed to automatically block sell orders when delays occurred in the delivery of purchased securities. Without that control, sell transactions risked inadvertently affecting the holdings of unrelated clients. The regulator concluded that the board at the time had failed in its oversight duties under the WpHG.

The investigation also revealed shortcomings in how OLB handled bundled financial products. In some cases, clients purchasing linked products, such as investment funds combined with interest vouchers for deposit accounts, were not informed of individual cost components before purchase. This lack of transparency breached section 63(9) of the WpHG, which requires firms to provide clear, component-level cost disclosures for packaged investments.

Adding to its compliance woes, OLB also failed to properly disclose inducements received from third parties between 2020 and 2021. German law allows such inducements only when they enhance the quality of the service and are disclosed in a transparent way, requirements OLB did not meet.

BaFin underscored that investment firms and their staff must meet all legal obligations in full, from safeguarding client ownership rights to maintaining transparency on costs and incentives. Under the WpHG, the regulator can impose fines of up to €5 million or 10% of total revenue for such breaches.

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