German regulators may soon find themselves in the investment selection and recommendation business, as the country’s finance minister, Wolfgang Schaeuble, left the door open to banning some financial products deemed too risky.

German officials stepping up regulation of unregulated markets

According to a report in Bloomberg, Schaeuble directed German regulators to formulate rules to step up supervision of products traded on unregulated markets. “But transparency and traceability must be increased. Whether the measures under discussion should include bans on certain products in the gray market remains to be seen,” he was quoted as saying.

German Wolfgang Schaeuble

Germany is in the process of tightening its regulation of financial products, particularly in light of last month’s insolvency of Prokon Regenerative Energien GmbH, a clean-energy developer that raised $1.9 billion by selling profit- participation rights to about 75,000 small investors, according to the report. Schaeuble cited Prokon as one of the reasons behind him asking German regulators to draw up new rules on supervision.

Bankruptcy leaves investors, employees out in cold, regulators asking questions

Prokon had promised investors a 6 percent return on their investment, to be generated by 314 wind turbines.  The company, with 1,300 employees, filed for bankruptcy protection last month, leaving investors and employees in the lurch.

The German justice minister is also stepping in, noting that certain products should be subject to limits on advertising and also pushing for regulators to determine if certain products involved excessive risk for consumers.