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Statement by Vice-President Reding and Commissioner Barnier on trilogue agreement on criminal sanctions for market abuse

European Commission - IP/13/1299   20/12/2013

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European Commission

Press release

Brussels, 20 December 2013

Statement by Vice-President Reding and Commissioner Barnier on trilogue agreement on criminal sanctions for market abuse

The European Commission has welcomed today's political agreement on the Commission's proposal for a Directive on criminal sanctions for market abuse (IP/11/1218). The agreement follows four so-called trilogue meetings between the Commission and the two co-legislators (the European Parliament and the Council of Ministers). The breakthrough, endorsed by Member States today, shows that Europe is willing to take all measures necessary to counter insider dealing and market abuse in its financial markets. Member States will have to make sure that such behaviour, including the manipulation of benchmarks, is a criminal offence, punishable with effective sanctions everywhere in Europe. The political agreement is due to be confirmed by the European Parliament in plenary, expected in January 2014.

"Market abuse is a major problem for confidence in our financial system and we need to tackle it head-on. This means closing regulatory loopholes which can be exploited by manipulators in the financial market. Criminal law is a powerful deterrent, and, following today's breakthrough, those guilty of market abuse will face the full force of criminal law wherever they are in our Union," said Vice-President Viviane Reding, the EU's Justice Commissioner. "I hope we can now swiftly dot the 'i's and cross the 't's so this proposal can quickly become law. The EU is applying a zero-tolerance policy when it comes to market abuse and rate rigging. We need to protect the integrity of our markets and we need to protect the money of our citizens."

Internal Market and Services Commissioner Michel Barnier said: "This is great news for investors and an unwelcome Christmas present for white collar criminals. Offenders found guilty of market abuse will finally face jail across the European Union. Together with our Market Abuse Regulation, the EU has significantly strengthened the powers of Member States to detect and punish severely insider dealing and market manipulation. In particular, those who manipulate benchmarks such as Euribor will in future face large fines or jail. I pay tribute to the European Parliament for improving our proposal by fixing defined jail terms. I would also like to thank the European Parliament, especially the rapporteur, Arlene McCarthy, as well as the Lithuanian Presidency for their excellent work in arriving at this agreement."

Today's agreement means that:

  • There will be common EU definitions of 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 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.

Background

Investors who trade on insider information and manipulate markets by spreading false or misleading information can currently avoid sanctions by taking advantage of differences in law between the 28 EU Member States. Some countries’ authorities lack effective sanctioning powers while in others criminal sanctions are not available for certain insider dealing and market manipulation offences. Effective sanctions can have a strong deterrent effect and reinforce the integrity of the EU’s financial markets.

That is why the European Commission on 20 September 2011 proposed EU-wide rules to ensure minimum criminal sanctions for insider dealing and market manipulation (IP/11/1218). In July 2012 the Commission presented amendments to its original proposal in order to clearly prohibit the manipulation of benchmarks, including LIBOR and EURIBOR, and make such manipulation a criminal offence (IP/12/846).

Proposing these rules, for the first time, the European Commission used new powers under the Lisbon Treaty to enforce an EU policy through criminal sanctions. The draft Directive requires Member States to take the necessary measures to ensure that the criminal offences of insider dealing and market manipulation are subject to criminal sanctions. Member States will also be required to impose criminal sanctions for inciting, aiding and abetting market abuse, as well as for attempts to commit such offences. The Directive complements a separate proposal for a Regulation on Market Abuse, endorsed by the European Parliament on 10 September 2013 (MEMO/13/774), which improves the existing EU legislative framework and reinforces administrative sanctions.

More information

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 Commissioner

http://ec.europa.eu/commission_2010-2014/barnier/index_en.htm

Follow the Vice-President on Twitter: @VivianeRedingEU

Follow EU Justice on Twitter: @EU_Justice

Follow Commissioner Barnier on Twitter: @MichelBarnierEU

Follow EU Internal Market on Twitter: @EU_Markt

Contacts :

Chantal Hughes (+32 2 296 44 50)

Mina Andreeva (+ 32 2 299 13 82)

Carmel Dunne (+32 2 299 88 94)

Audrey Augier (+32 2 297 16 07)


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