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AMF Issues Market Abuse Regulation Penalties Worth Millions of Euros in France

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The Autorité des Marchés Financiers (AMF), France's financial markets authority, has imposed penalties totalling several million euros on three companies and a number of individuals. The sanctions are a result of insider trading committed within the company, incitement to commit insider trading and inaccurate records within insider lists.

As part of an extensive investigation, AMF scrutinised the trading patterns of ten parties – three legal persons and seven natural persons – at the same time. The matter provides a reminder for businesses of the importance of maintaining a robust market abuse policy and accurate records.



The insider dealing activities originated several years ago, when a management consultancy firm, referred to as Company A for the purposes of this report, decided to sell its stake in a real estate firm, Company B.

Initially, a third company, Company C, was set to acquire the aforementioned shares before discussions stalled. However, Company C did purchase three-quarters of Company B’s portfolio eventually, after which Company B repurchased its own shares and delisted from the stock exchange.

AMF's sanctions commission found that two companies and several individuals had received inside information about the potential acquisition and used it to buy shares in company B. In one instance, an individual was found to have recommended and incited insider trading by his brother and partner. This was deemed a separate issue from the unlawful disclosure of inside information.

AMF found that there was evidence to show the individuals had informed their contacts of the nature of the inside information, which is contrary to the Market Abuse Regulation (MAR) in itself. However, in addition, they had also actively encouraged those contacts to use the information to make trades that would take advantage of this information. The latter warranted the additional sanction, as it was seen to have directly contributed to market abuse.

The financial authority determined that the companies and individuals had made capital gains from their purchases, including several hundred thousand euros raised by the CEO of the fourth organisation involved, Company D.

The sanctions

Company D received the largest financial sanction of all parties, with a combined total of over a million for the company and its CEO. Another business, which also participated, received almost a million euros in penalty, as did its main beneficiary shareholders.

Of the individuals charged, a subcontractor of Company B faced a penalty of several hundred thousand for recommending that his brother and partner also commit insider trading. There were also other, smaller penalties issued, in the range of a few thousand.

Company B itself was unable to present accurate and complete insider lists to the regulator with regard to the two pieces of inside information. As a consequence of this, the firm incurred a penalty in the realm of hundreds of thousands.  

Why was Company B sanctioned for unsatisfactory insider list management?

Although there was an insider list created for the inside information, AMF found discrepancies in the way that officials managed the list. One individual, who worked in another organisation adjacent to Company B’s premises, was found to have had access to the inside information and to have used it to inform a trade. However, he was not added to the insider list, despite having worked closely with associates of the company who also had access to that information.

Furthermore, an employee at Company B had access to the information and was placed on the insider list but was not informed of his addition to the list. The company confirmed it did not inform him of his legal obligation to keep the information confidential and, in doing so, failed to adhere to the requirements of MAR.

It is essential that companies ensure insiders know that they are on the list and that they acknowledge their registration and their responsibilities. InsiderLog is an insider list management platform which streamlines this process. It automates reminder emails to make sure each insider confirms they understand their legal obligations. This insulates the issuer against non-compliance with the law and minimises the risk of penalties.


The law

A company’s compliance culture has a great bearing on the actions of those with connections to that business. The deficiency in the mechanism of managing insider lists at company B indicated that its market abuse policy was not functioning optimally. This resulted in the occurrence of misconduct.

MAR stipulates the format of insider lists and creates obligations for listed companies that are required to maintain such lists. These include when to create a list, when to update it and how to record the changes that take place. Following MAR’s requirements shows that a company is determined to document who has access to each piece of inside information and to inform them of their legal obligations relating to it.

During the course of this investigation, it was determined that the companies and individuals involved should have been cognizant of the nature of their actions and the potential consequences. The lack of written records to demonstrate this was so was a factor in the decision to impose financial sanctions.

The companies found to have engaged in this activity will face not only financial consequences but could also experience reputational damage that may affect their future dealings with suppliers and clients. This underscores the importance of implementing robust procedures to prevent market abuse.

The solution 

Issuers must understand when information becomes classified as inside information. MAR states that it is information of a precise nature “which, if it were made public, would be likely to have a significant effect on the prices of financial instruments”.

At this point, the company must disclose the information to the public, or it can delay if all three of these circumstances apply:

  • If disclosing immediately would harm the interests of the issuer
  • It is unlikely the delay would mislead the public
  • The issuer can guarantee it remains confidential

In instances where inside information is available, it is imperative to establish an insider list for each relevant piece of information. The list should encompass all individuals who have access to the information. The insiders must provide accurate personal details and acknowledge their obligations under the Market Abuse Regulation (MAR). These obligations include not utilising the information for personal gain and refraining from unauthorised dissemination of the information. It is important to continuously monitor and update the insider list by adding or removing individuals as they gain or lose access to the information.

One way to ensure that you meet the requirements of MAR for insider lists is to use InsiderLog. It is an online platform that creates insider lists in the required format and records all changes, maintaining a comprehensive audit trail. InsiderLog also sends out automatic reminders to insiders to ensure that they confirm their details and understand their responsibilities.

By implementing this frictionless workflow, you help create a compliance culture that permeates the business and dissuades employees from committing market abuse. You can request a demo of InsiderLog or contact your local sales representative.

References and further reading

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