Chief Sales Officer (CSO) – Sales Supervisor
Section 87 German Securities Trading Act – Use of employees in the provision of investment advice, as sales supervisors, in portfolio management or as compliance officers; power to issue statutory orders
(1) An investment services enterprise may entrust an employee with the provision of investment advice only if that employee has the degree of expertise and reliability required for the activity. The investment services enterprise must notify
1. the employee and,
2. where the investment services enterprise has sales supervisors within the meaning of subsection (4), the sales supervisor directly responsible for that employee on the basis of the investment services enterprise’s organisational structure
to BaFin before that employee starts the activity referred to in sentence 1. If there is any change in the circumstances notified by the investment services enterprise under sentence 2, the new circumstances must be notified to BaFin without undue delay. In addition, if one or more complaints within the meaning of Article 26 of Delegated Regulation (EU) 2017/565 are made by retail clients about the investment services enterprise,
1. each complaint,
2. the name of the employee on the basis of whose activity the complaint being made, and
3. where the investment services enterprise has several establishments, branches or other organisational units, the establishment, branch or organisational unit to which the employee is assigned or for which the employee predominantly or usually performs the activity to be notified under sentence 1
must be notified to BaFin.
(2) An investment services enterprise may only entrust an employee to provide information to clients about financial instruments, structured deposits, investment services or ancillary investment services (sales force staff) if that employee has the degree of expertise and reliability required for the activity.
(3) An investment services enterprise may only entrust an employee with portfolio management if that employee has the degree of expertise and reliability required for the activity.
(4) An investment services enterprise may only entrust an employee with designing, implementing or monitoring sales targets within the meaning of section 80 (1) sentence 2 number 3 (sales supervisor) if that employee has the degree of expertise and reliability required for the activity. The investment services enterprise must notify the employee to BaFin before that employee starts the activity referred to in sentence 1. If there is any change in the circumstances notified by the investment services enterprise under sentence 2, the new circumstances must be notified to BaFin without undue delay.
(5) An investment services enterprise may only entrust an employee with responsibility for the compliance function within the meaning of Article 22(2) of Delegated Regulation (EU) 2017/565 and for reports to management under Article 25(2) of Delegated Regulation (EU) 2017/565 (compliance officer) if that employee has degree of expertise and reliability required for the activity. The investment services enterprise must notify the employee to BaFin before that employee starts the activity referred to in sentence 1. If there is any change in the circumstances notified by the investment services enterprise under sentence 2, the new circumstances must be notified to BaFin without undue delay.
(6) If there is evidence indicating that an employee
1. does not satisfy or no longer satisfies the requirements under subsection (1) sentence 1, subsection (2) sentence 1, in each case in conjunction with section 96, or subsection (5) sentence 1, BaFin may, without prejudice to its powers set under section 4, prohibit the investment services enterprise from entrusting that employee with the notified activity for as long as the employee not satisfy the statutory requirements, or
2. has infringed provisions of this Part that are to be complied with when performing the employee’s activity, BaFin may, without prejudice to its powers under section 6,
a) caution the investment services enterprise and the employee; or
b) prohibit the investment services enterprise for a period of up to two years from entrusting the employee with the notified activity.
BaFin may publish on its website orders within the meaning of sentence 1 that have become unappealable, unless this publication is likely to damage the legitimate interests of the undertaking. The public announcement under sentence 2 must be made without specifying the name of the employee concerned. Objections and appeals against measures under sentence 1 do not have any suspensory effect.
(7) BaFin must maintain an internal database of the employees to be notified under subsections (1), (4) and (5), the complaints made about them under subsection (1) and the orders relating to their activity under subsection (6).
(8) Subsections (1) to (7) do not apply to employees of an investment services enterprise who work solely in a branch within the meaning of section 24a of the Banking Act or in several such branches.
(9) The Federal Ministry of Finance may, by way of a statutory order not requiring the consent of the Bundesrat, adopt more detailed requirements relating to
1. the content, nature, language, scope and form of the notifications under subsections (1), (4) or (5),
2. the expertise and reliability under subsection (1) sentence 1, subsections (2), (3), (4) sentence 1, in each case in conjunction with section 96, and subsection (5) sentence 1, and
3. the content of the database under subsection (7) and the storage period for the entries,
including the relevant procedures. The statutory order under sentence 1 can stipulate in particular that the relevant investment services enterprise will be granted write access to the database entries that are to be created for the enterprise under subsection (7) and that it will be given the responsibility for these entries being correct and up to date. The Federal Ministry of Finance may delegate the authority to BaFin by way of a statutory order not requiring the consent of the Bundesrat.
(10) Subsections (1) to (3) do not apply to agreements on consumer loans for immovable property that are linked to a condition precedent that the consumer is provided with an investment service relating to covered bonds that have been issued to secure the financing of and having identical terms as the agreement on the consumer loan for immovable property so that the loan can be payable, refinanced or redeemed.
§ 2 WpHG Employee Notification Regulation (WpHG-Mitarbeiteranzeigeverordnung – WpHGMaAnzV) – Expertise of the Sales Supervisor
(1) Sales Supervisors within the meaning of Section 87 (4) of the Securities Trading Act must have the expertise required for their work. It must be continuously maintained and regularly updated. The investment services company reviews the expertise of each employee at least once a year, taking into account changes in legal requirements and its range of investment services, ancillary investment services, financial instruments and structured deposits.
(2) Section 1 (2), (3) and (5) applies to the requirements for expertise, also in relation to structured deposits, with the proviso that the focus is on those investment services, ancillary investment services, financial instruments, structured deposits and transactions for which the employee designs, implements or monitors sales guidelines.
(3) The expertise also includes, in particular, knowledge of the legal requirements for sales regulations and their design, implementation and monitoring.
(4) The expertise required in accordance with paragraphs 1 to 3 must be evidenced by diplomas or job references, if necessary in conjunction with job descriptions, by evidence of training or further education or in another suitable manner.