Market abuse: EU enacts criminal sanctions to defend market integrity
15 Apr 2014 01:08 PM
The EC welcomes the formal adoption by the
Council of its proposal for a Regulation on market abuse and its proposal for a
Directive on criminal sanctions for market abuse.
Vice-President Viviane Reding, the EU's Justice
Commissioner, and Internal Market and Services Commissioner
Michel Barnier said: "Today's adoption sends a strong zero
tolerance warning to those engaging in insider dealing and market manipulation.
It demonstrates Europe's commitment to protect the integrity of its
financial markets and deter criminals who want to make money by deliberately
manipulating information. Administrative authorities will now have greater
powers to investigate market abuse and to impose fines of up to millions of
euro, while those found guilty of market abuse will be deterred by the prospect
of facing jail across the Union. We now need to pass from laws to action:
Member States should swiftly implement these new rules so criminals have no
place to hide in Europe."
Next steps: After the signature of the
Regulation and the Directive by the Presidents of the European Parliament and
the Council and their publication in the Official Journal, expected in June,
there will be a 24 month period for the adoption of implementing measures by
the Commission concerning the Regulation and for Member States to implement the
Directive in national law.
The
adoption of the Regulation means that:
-
Existing market abuse rules will be broadened to include
abuse on the electronic trading platforms that have proliferated in recent
years;
-
abusive strategies enacted through high frequency
trading will be clearly prohibited;
-
those who manipulate benchmarks such as LIBOR will be
guilty of market abuse and face tough fines;
-
market abuse occurring across both commodity and related
derivative markets will be prohibited, and cooperation between financial and
commodity regulators will be reinforced;
-
the
deterrent effect of the legislation will be far greater than today, with the
possibility of fines of at least up to three times the profit made from market
abuse, or at least 15% of turnover for companies. Member-States could decide to
go beyond this minimum.
The
adoption of the Directive means that:
-
There will be common EU definitions for market abuse
offences such as insider dealing, unlawful disclosure of information and market
manipulation;
-
there will be a common set of criminal sanctions
including fines and imprisonment of at least four years for insider
dealing/market manipulation and two years for unlawful disclosure of inside
information;
-
legal persons (companies) will be held liable for market
abuses;
-
Member States need to establish jurisdiction for these
offences if they occur in their country or the offender is a
national;
-
Member States need to ensure that judicial and law
enforcement authorities dealing with these highly complex cases are well
trained.
More information
Market Abuse Regulation – Frequently Asked
Questions: MEMO/14/78; MEMO/13/774
European Commission - Market Abuse
http://ec.europa.eu/internal_market/securities/abuse/index_en.htm
European Commission – criminal law
policy:
http://ec.europa.eu/justice/criminal/criminal-law-policy
Homepage of Vice-President Viviane Reding, EU Justice
Commissioner: http://ec.europa.eu/reding
Homepage of Commissioner Michel Barnier, EU Internal
Market and Services Commissionerhttp://ec.europa.eu/commission_2010-2014/barnier/index_en.htm<
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Follow the Vice-President on Twitter: @VivianeRedingEU
Follow EU Justice on Twitter: @EU_Justice
Follow Commissioner Barnier on Twitter:
@MBarnierEU
Follow EU Internal Market on Twitter:
@EU_Markt