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A German communications adviser oversaw up to €1mn in cash on behalf of a former Perella Weinberg partner and invested the money alongside his own funds in companies the M&A banker described to him as takeover targets.
The 48-year-old communications adviser is on trial in Frankfurt for insider trading, which can be punished with up to five years in jail.
Prosecutors allege that he made €14mn in profit between 2017 and 2021 as he used confidential information from the banker on upcoming mergers and acquisitions on which Perella Weinberg was advising. Neither the banker nor the communications adviser can be named for legal reasons.
The defendant was arrested in Munich last year in a sprawling cross-border investigation. The Perella Weinberg banker died by suicide days after police raided the bank’s offices and his home in London early last year. The communications adviser told the court that he was still “devastated and shocked” by his friend’s death.
He told the court that he also invested money on behalf of the banker, buying highly leveraged options as well as shares.
The €50,000 seed money for the banker’s investments was provided by the defendant in 2017, he said. After the first profitable trade, which more than doubled their money, both men agreed that the communications adviser would continue to oversee the money on the banker’s behalf. He said he kept an informal account of the banker’s share in an Excel sheet.
After a successful investment in a stock recommended by the banker in 2021, the banker’s share of €400,000 had turned into €900,000. “Overall, I owed him close to €1mn at the time,” the defendant told the court.
“It is true that I bought shares and derivatives based on information I received from [the banker],” the defendant told the court in a statement on Wednesday, adding that he had been unable to assess if the tips he received constituted inside information.
The defendant said the banker on several occasions told him that a certain stock “should be looked at”, “could become interesting” or “may turn into a takeover target” but did not share specific information such as the identity of a prospective bidder, offer prices or timelines.
He said he neither asked his friend about such details nor inquired about the source of the information. “I did not want to put pressure on him,” the defendant said, adding that the lack of specific details meant he occasionally sold out too early or bought options at the wrong price, which resulted in losses.
“I understand today that I probably should not have used the information to enrich myself,” he told the panel of five judges.
The defendant told the court he had become fascinated by the stock market as a teenager and started to invest in shares as a young adult, adding that his investment success varied over time and included huge losses.
The men first met in Munich in the early 2000s when the banker was still a student and became the communication adviser’s subtenant during an internship. They kept in touch and became friends, discussing job-related concerns and exchanging their views about the stock market.
They jokingly called their meetings, which often happened in the morning when the banker was on business trips in Frankfurt or Munich, “the breakfast trust”.
The trial continues.
