CELEX: 62013CJ0140
Reference for a preliminary ruling
Approximation of laws
Directive 2004/39/EC
Article 54
Obligation of professional secrecy incumbent on national financial supervisory authorities
Information concerning a fraudulent investment firm in compulsory liquidation

This request for a preliminary ruling concerns the interpretation of Article 54 of Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments amending Council Directives 85/611/EEC and 93/6/EEC and Directive 2000/12/EC of the European Parliament and of the Council and repealing Council Directive 93/22/EEC (
OJ 2004 L 145, p. 1
).
The request has been made in proceedings between Mr and Mrs Altmann, Mr Abel, Mr and Mrs Apitzsch, Ms Arnold, Ms Assheuer and Mr and Mrs Aubele, on the one hand, and the Bundesanstalt für Finanzdienstleistungsaufsicht (Federal Office for the Supervision of Financial Services, ‘the BaFin’), on the other, concerning the latter’s decision of 9 October 2012 refusing access to certain documents and information regarding Phoenix Kapitaldienst GmbH Gesellschaft für die Durchführung und Vermittlung von Vermögensanlagen (‘Phoenix’).
Legal background
European Union law
Recitals 2 and 63 in the preamble to Directive 2004/39 state:
‘(2)
… it is necessary to provide for the degree of harmonisation needed to offer investors a high level of protection and to allow investment firms to provide services throughout the Community, being a Single Market, on the basis of home country supervision. …
…
(63)
… Due to increasing cross-border activity, competent authorities should provide each other with the relevant information for the exercise of their functions, so as to ensure the effective enforcement of this Directive, including in situations where infringements or suspected infringements may be of concern to authorities in two or more Member States. In the exchange of information, strict professional secrecy is needed to ensure the smooth transmission of that information and the protection of particular rights.’
Article 17(1) of Directive 2004/39, entitled ‘General obligation in respect of on-going supervision’, provides:
‘Member States shall ensure that the competent authorities monitor the activities of investment firms so as to assess compliance with the operating conditions provided for in this Directive. Member States shall ensure that the appropriate measures are in place to enable the competent authorities to obtain the information needed to assess the compliance of investment firms with those obligations.’
Article 50 of that directive, entitled ‘Powers to be made available to competent authorities’, provides:
‘1.   Competent authorities shall be given all supervisory and investigatory powers that are necessary for the exercise of their functions. …
2.   The powers referred to in paragraph 1 shall be exercised in conformity with national law and shall include, at least, the rights to:
(a)
have access to any document in any form whatsoever and to receive a copy of it;
(b)
demand information from any person and if necessary to summon and question a person with a view to obtaining information;
…’
Article 54 of that directive, entitled ‘Professional Secrecy’, states:
‘1.   Member States shall ensure that competent authorities, all persons who work or who have worked for the competent authorities … are bound by the obligation of professional secrecy. No confidential information which they may receive in the course of their duties may be divulged to any person or authority whatsoever, save in summary or aggregate form such that individual investment firms, market operators, regulated markets or any other person cannot be identified, without prejudice to cases covered by criminal law or the other provisions of this Directive.
2.   Where an investment firm … has been declared bankrupt or is being compulsorily wound up, confidential information which does not concern third parties may be divulged in civil or commercial proceedings if necessary for carrying out the proceeding.
3.   Without prejudice to cases covered by criminal law, the competent authorities … which receive confidential information pursuant to this Directive may use it only in the performance of their duties and for the exercise of their functions … However, where the competent authority or other authority, body or person communicating information consents thereto, the authority receiving the information may use it for other purposes.
4.   Any confidential information received, exchanged or transmitted pursuant to this Directive shall be subject to the conditions of professional secrecy laid down in this Article. Nevertheless, this Article shall not prevent the competent authorities from exchanging or transmitting confidential information … with the consent of the competent authority or other authority or body or natural or legal person that communicated the information.
5.   This Article shall not prevent the competent authorities from exchanging or transmitting in accordance with national law, confidential information that has not been received from a competent authority of another Member State.’
Article 56(1) of Directive 2004/39, entitled ‘Obligation to cooperate’, provides:
‘Competent authorities of different Member States shall cooperate with each other whenever necessary for the purpose of carrying out their duties under this Directive, making use of their powers whether set out in this Directive or in national law.
Competent authorities shall render assistance to competent authorities of the other Member States. In particular, they shall exchange information and cooperate in any investigation or supervisory activities.
…’
German law
Paragraph 1(1) of the Law on freedom of information (Informationsfreiheitsgesetz) of 5 September 2005 (BGBl. 2005 I, p. 2722, ‘the IFG’) is worded as follows:
‘Everyone is entitled to official information from the authorities of the Federal Government in accordance with the provisions of this Law.’
Paragraph 3(4) of the IFG, entitled ‘Protection of special public interests’, provides:
‘The right of access to information shall not apply
…
4.
where the information is subject to an obligation of secrecy or confidentiality prescribed by a legal provision or by the general administrative provision on the substantive and organisational protection of classified material, or where the information is subject to professional or special official secrecy.’
Paragraph 9(1) of the Law on the activities of credit institutions (Kreditwesengesetz) of 9 September 1998 (BGBl. 1998 I, p. 2776), as amended by the Law of 4 July 2013 (BGBl. 2013 I, p. 1981, ‘the KWG’), entitled ‘Obligation of secrecy’, provides:
‘Persons employed by [the BaFin], in so far as their work serves to implement this Law, may not divulge or use without authorisation facts which have come to their notice in the course of their duties and which are to be kept secret in the interests of the [persons subject to this Law] or of a third party, in particular business and trade secrets, even after they have left such employment or their duties have ended. …’
Paragraph 8(1) of the Law on securities trading (Wertpapierhandelgesetz) of 9 September 1998 (BGBl. 1998 I, p. 2708), as amended by the Law of 15 July 2013 (BGBl. 2013 I, p. 2390, ‘the WpHG’), entitled ‘Obligation of secrecy’, is worded in an identical manner to Paragraph 9(1) of the KWG.
The dispute in the main proceedings and the questions referred for a preliminary ruling
It is clear from the request for a preliminary ruling that a collective procedure for the settlement of debts was opened against Phoenix by judgment of the Amtsgericht Frankfurt am Main (Local Court, Frankfurt am Main) of 1 July 2005. The company was dissolved on that occasion and is now in judicial liquidation. Its business model aimed primarily to defraud investors. Approximately 30000 investors were affected and the damage amounts to EUR 600 million.
By judgment of the Landgericht Frankfurt am Main (Regional Court, Frankfurt am Main) of 11 July 2006, delivered in criminal proceedings, two former executives of Phoenix were found guilty of breach of trust and investment fraud and were sentence to terms of imprisonment of seven years and four months and two years and three months respectively.
On 21 May 2012, the applicants in the main proceedings relied before the BaFin on Paragraph 1(1) of the IFG as grounds for consulting documents concerning Phoenix, such as the auditors’ reports, contracts, file notes, internal opinions, relevant correspondence, activity reports and reports on the management of compensation funds for the investment companies.
By decision of 31 July 2012, the BaFin largely acceded to the request for information. However, it refused to allow the applicants in the main proceedings to consult the special audit report prepared on 31 March 2002 by Ernst & Young, or the audit reports for Phoenix, the internal opinions, reports, correspondence, documents, agreements, contracts, file notes or letters relating to Phoenix or any of the internal opinions and correspondence drafted after the communication of that audit report.
The BaFin dismissed those requests, inter alia, on the ground that the obligations of secrecy laid down by Paragraph 9 of the KWG and Paragraph 8 of the WpHG, read in conjunction with Paragraph 3(4) of the IFG, prohibited access to the information concerned. On 21 August 2012, the applicants in the main proceedings lodged an objection to that refusal. By decision of 9 October 2012, the BaFin dismissed that objection.
On 12 November 2012, the applicants in the main proceedings brought an action before the referring court against that decision. By judgment of 11 December 2012, based on the case-law of the Bundesverwaltungsgericht (Federal Administrative Court), the referring court ordered the BaFin to grant access to part of the information requested.
However, it is apparent from the order for reference that in another case also concerning access to information held by the BaFin concerning Phoenix, the referring court decided, by judgment of 12 March 2008, that the right to information could be relied on under Paragraph 1(1) of the IFG when the objective of protection referred to in Paragraph 9 of the KWG and Paragraph 8 of the WpHG no longer required secrecy. In that judgment, it held that there was no legitimate interest which required Phoenix’s business and trade secrets to remain confidential because the information requested related to criminal acts and other serious transgressions of the law.
The referring court stresses that it is still of the opinion that, in a case such as that in the main proceedings, it is unnecessary to protect Phoenix’s interests and, therefore, that it is possible, as an exception, to disregard the obligations of secrecy laid down in Paragraph 9 of the KWG and Paragraph 8 of the WpHG.
In those circumstances the Verwaltungsgericht Frankfurt am Main decided to stay proceedings and to refer to the Court the following questions for a preliminary ruling:
‘(1)
Is it compatible with EU law for mandatory obligations of secrecy which are incumbent on the national authorities responsible for supervising financial services undertakings and which are based on relevant acts of EU law (in this case, Directive 2004/109/EC [of the European Parliament and of the Council of 15 December 2004 on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market and amending Directive 2001/34/EC (
OJ 2004 L 390, p. 38
)], Directive 2006/48/EC [of the European Parliament and of the Council of 14 June 2006 relating to the taking up and pursuit of the business of credit institutions (
OJ 2006 L 177, p. 1
)] and Directive 2009/65/EC [of the European Parliament and of the Council of 13 July 2009 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) (
OJ 2009 L 302, p. 32
)]) and have been transposed accordingly into national law, as in the Federal Republic of Germany by Paragraph 9 of the [KWG] and Paragraph 8 of the [WpHG], to be capable of being breached by the application and interpretation of a provision of national procedural law such as Paragraph 99 of the Code of Administrative Court Procedure (Verwaltungsgerichtsordnung)?
(2)
Can a supervisory authority such as the [BaFin] rely, as against a person who has applied to it under the IFG for access to information concerning a particular financial services provider, on obligations of secrecy incumbent upon it inter alia under EU law, as laid down in Paragraph 9 of the [KWG] and Paragraph 8 of the [WpHG], even in circumstances where the essential business concept of the company which offered financial services but has since been dissolved on grounds of insolvency and is in liquidation consisted in large-scale investment fraud and the wilful harming of investors’ interests and the responsible executives of the company have been sentenced by final judgment to terms of several years’ imprisonment?’
Procedure before the Court
By decision of 19 May 2014, received at the Court Registry on the same day, the referring court informed it that it did not intend to maintain its first question. In those circumstances, in accordance with Article 100(1) of the Rules of Procedure of the Court, there is no need to answer that question.
The second question
As a preliminary point, it must be stated that, even though the referring court mentions Directives 2004/109, 2006/48 and 2009/65, having regard to all the additional information provided by that court in answer to a request for clarification addressed to it pursuant to Article 101 of the Rules of Procedure, and taking account of the scope of Phoenix’s authorisation, Article 54 of Directive 2004/39 is the only provision relevant in the case in the main proceedings.
Therefore, the question referred must be examined only in the light of that article.
By its second question, the referring court asks essentially whether Article 54(1) and (2) of Directive 2004/39 must be interpreted as meaning that, in administrative proceedings, a national supervisory authority may rely on obligations of secrecy as against a person who has applied to it for access to information concerning a financial services provider which has been placed in judicial liquidation, where the essential business concept consisted in large-scale investment fraud and the wilful harming of investors’ interests and the responsible executives of the company have been sentenced by final judgment to terms of several years’ imprisonment.
In order to answer the question referred, account must be taken of the objectives pursued by Directive 2004/39 and the context of Article 54.
It is clear from recital 2 in the preamble to Directive 2004/39 that the directive aims to provide for the degree of harmonisation needed to offer investors a high level of protection and to allow investment firms to provide services throughout the European Union, on the basis of supervision in the home Member State.
It is also apparent from recital 63 in the preamble to that directive that, due to increasing cross-border activity, competent authorities should provide each other with the relevant information for the exercise of their functions, so as to ensure the effective enforcement of the directive.
Thus, under Article 17(1) of Directive 2004/39, the Member States must ensure that the competent authorities continuously monitor the activities of investment firms so as to assess compliance with their obligations.
Article 50(1) and (2) of that directive provide that the competent authorities must have all supervisory and investigatory powers that are necessary for the exercise of their functions, including the rights to have access to any document and to demand information from any person.
Article 56(1) of Directive 2004/39 states that competent authorities are to render assistance to competent authorities of the other Member States. In particular, they must exchange information and cooperate in any investigation or supervisory activities.
The effective monitoring of the activities of investment firms, through supervision within a Member State and the exchanging of information by the competent authorities of several Member States, as briefly described in the preceding paragraphs, requires that both the firms monitored and the competent authorities can be sure that the confidential information provided will, in principle, remain confidential (see by analogy, judgment in
Hillenius
, 110/84,
EU:C:1985:495
, paragraph 27).
As the Advocate General noted in point 37 of his Opinion, and as is also clear from the last sentence of recital 63 in the preamble to Directive 2004/39, the absence of such secrecy is liable to compromise the smooth transmission of confidential information necessary for monitoring.
Therefore, in order to protect not only the firms directly concerned, but also the normal functioning of the markets in financial instruments of the European Union, Article 54(1) of Directive 2004/39 imposes, as a general rule, the obligation to maintain professional secrecy.
The specific cases in which the general prohibition on divulging confidential information covered by professional secrecy does not preclude their transmission or use are set out in detail in Article 54 of Directive 2004/39.
It follows that there are no exceptions to the general prohibition on divulging confidential information other than those specifically provided for in that article.
In the present case, and in view of the fraudulent nature of the activities carried out by Phoenix, the sentences of imprisonment imposed on its executives and the fact that it was put into compulsory liquidation, it must be observed, first, that Article 54(1) of Directive 2004/39 provides that the obligation to maintain professional secrecy is ‘without prejudice to cases covered by criminal law’.
Second, it must be recalled that Article 54(2) of that directive provides that, where an investment firm has been declared bankrupt or is being compulsorily wound up, ‘confidential information which does not concern third parties may be divulged in civil or commercial proceedings if necessary for carrying out the proceeding’.
Therefore, as regards information concerning investment firms declared bankrupt or being compulsorily wound up, such as that at issue in the main proceedings, the obligation to maintain professional secrecy may be disregarded, without prejudice to cases covered by criminal law, only where the three conditions referred to in the preceding paragraph — namely that the confidential information must not concern third parties, that that information is divulged in civil or commercial proceedings and that that information is necessary for carrying out that proceeding — are fulfilled.
It does not appear from the order for reference that the dispute in the main proceedings, which concerns an administrative procedure relating to a request for access to information and documents held by a national supervisory authority on the basis of the IFG, is covered by criminal law, since that request was submitted after the criminal convictions of Phoenix’s executives, nor that it is made in the course of civil or commercial proceedings brought by the applicants in the main proceedings.
If that is the case, which is for the referring court to ascertain, none of the provisions of Article 54 of Directive 2004/39 enable the obligation to maintain professional secrecy to be disregarded.
The circumstances described by the referring court according to which, first, the main business model of the firm concerned consisted in large scale fraud and wilful harming of investors’ interests and, second, several executives of that firm received prison sentences, does not alter the answer to be given to the question referred.
Accordingly, the answer to the second question is that Article 54(1) and (2) of Directive 2004/39 must be interpreted as meaning that, in administrative proceedings, a national supervisory authority may rely on the obligation to maintain professional secrecy against a person who, in a case not covered by criminal law and not in a civil or commercial proceeding, requests it to grant access to information concerning an investment firm which is in judicial liquidation, even where that firm’s main business model consisted in large scale fraud and wilful harming of investors’ interests and several executives of that firm have been sentenced to terms of imprisonment.
Costs
Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

On those grounds, the Court (Second Chamber) hereby rules:

Article 54(1) and (2) of Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments amending Council Directives 85/611/EEC and 93/6/EEC and Directive 2000/12/EC of the European Parliament and of the Council and repealing Council Directive 93/22/EEC must be interpreted as meaning that, in administrative proceedings, a national supervisory authority may rely on the obligation to maintain professional secrecy against a person who, in a case not covered by criminal law and not in a civil or commercial proceeding, requests it to grant access to information concerning an investment firm which is in judicial liquidation, even where that firm’s main business model consisted in large scale fraud and wilful harming of investors’ interests and several executives of that firm have been sentenced to terms of imprisonment.

[Signatures]
(
*1
)	Language of the case: German.