CELEX: 62009CJ0445
Directive 2003/6/EC
Market manipulation
Securing prices at an abnormal or artificial level

This reference for a preliminary ruling concerns the interpretation of Article 1(2)(a), second indent, of Directive 2003/6/EC
of the European Parliament and of the Council of 28 January 2003 on insider dealing and market manipulation (market abuse)
(OJ 2003 L 96, p. 16).
This reference has been made in proceedings between IMC Securities BV (‘IMC’) and Stichting Autoriteit Financiële Markten
(the Netherlands Financial Markets Authority) (‘AFM’), which had imposed a fine on IMC for market manipulation.

Legal context

European Union (‘EU’) law
Recitals 2, 12 and 15 in the preamble to Directive 2003/6 state:
‘(2)      An integrated and efficient financial market requires market integrity. The smooth functioning of securities markets and public
confidence in markets are prerequisites for economic growth and wealth. Market abuse harms the integrity of financial markets
and public confidence in securities and derivatives.
…
(12)      Market abuse consists of insider dealing and market manipulation. The objective of legislation against insider dealing is
the same as that of legislation against market manipulation: to ensure the integrity of Community financial markets and to
enhance investor confidence in those markets. It is therefore advisable to adopt combined rules to combat both insider dealing
and market manipulation. A single Directive will ensure throughout the Community the same framework for allocation of responsibilities,
enforcement and cooperation.
…
(15)      Insider dealing and market manipulation prevent full and proper market transparency, which is a prerequisite for trading for
all economic actors in integrated financial markets.’
Article 1(2) of Directive 2003/6 provides:
‘For the purposes of this Directive …:
…
2.      “Market manipulation” shall mean:
(a)      transactions or orders to trade:
–        which give, or are likely to give, false or misleading signals as to the supply of, demand for or price of financial instruments,
or
–        which secure, by a person, or persons acting in collaboration, the price of one or several financial instruments at an abnormal
or artificial level,
unless the person who entered into the transactions or issued the orders to trade establishes that his reasons for so doing
are legitimate and that these transactions or orders to trade conform to accepted market practices on the regulated market
concerned;
(b)      transactions or orders to trade which employ fictitious devices or any other form of deception or contrivance;
(c)      dissemination of information through the media, including the Internet, or by any other means, which gives, or is likely to
give, false or misleading signals as to financial instruments, including the dissemination of rumours and false or misleading
news, where the person who made the dissemination knew, or ought to have known, that the information was false or misleading.
In respect of journalists when they act in their professional capacity, such dissemination of information is to be assessed,
without prejudice to Article 11, taking into account the rules governing their profession, unless those persons derive, directly
or indirectly, an advantage or profits from the dissemination of the information in question.
In particular, the following instances are derived from the core definition given in points (a), (b) and (c) above:
–        conduct by a person, or persons acting in collaboration, to secure a dominant position over the supply of or demand for a
financial instrument which has the effect of fixing, directly or indirectly, purchase or sale prices or creating other unfair
trading conditions,
–        the buying or selling of financial instruments at the close of the market with the effect of misleading investors acting on
the basis of closing prices,
–        taking advantage of occasional or regular access to the traditional or electronic media by voicing an opinion about a financial
instrument (or indirectly about its issuer) while having previously taken positions on that financial instrument and profiting
subsequently from the impact of the opinions voiced on the price of that instrument, without having simultaneously disclosed
that conflict of interest to the public in a proper and effective way.
The definitions of market manipulation shall be adapted so as to ensure that new patterns of activity that in practice constitute
market manipulation can be included.’
Article 5 of Directive 2003/6 reads as follows:
‘Member States shall prohibit any person from engaging in market manipulation.’

National law
The Law on market abuse (Wet marktmisbruik) transposes Directive 2003/6 into the Netherlands legal system. It came into force
on 1 October 2005. That Law amended, inter alia, Article 46b of the 1995 Law on the supervision of securities transactions
(Wet toezicht effectenverkeer 1995) (‘the 1995 Law’) as follows:
‘1.      In respect of the securities referred to in the relevant section, it is prohibited, in or from a State as referred to in Article
46(1)(a) or (b),
(a)      to undertake, or cause the undertaking of, transactions or to place, or cause the placing of, orders to trade which give,
or are likely to give, a false or misleading signal as to the supply of, demand for or price of those securities;
(b)      to undertake, or cause the undertaking of, transactions or to place, or cause the placing of, orders to trade with a view
to securing (“houden”) the price of those securities at an artificial level.’
On 1 January 2007 the Law on financial supervision (Wet op het financieel toezicht) and the Law establishing and amending
the Law on financial supervision (Invoerings- en aanpassingswet Wet op het financieel toezicht) entered into force.
The 1995 Law was repealed. The prohibition laid down in Article 46b(1)(b) of the 1995 Law is now laid down in Article 5:58(1)(b)
of the Law on financial supervision, which provides:
‘1.      In respect of the financial instruments referred to in the relevant section, it is prohibited, in or from a State referred
to in Article 5:56(1)(a), (b) or (d):
...
(b)      to undertake a transaction, or cause it to be undertaken, or to issue an order to trade, or cause it to be issued, in financial
instruments with a view to securing (“houden”) the price of those financial instruments at an artificial level, unless the
person who undertook the transactions, or caused them to be undertaken, or issued the orders to trade, or caused them to be
issued, establishes that his reasons for so doing are legitimate and that those transactions or orders to trade conform to
accepted market practices on the regulated market concerned or the multilateral trading facility concerned for which the investment
undertaking has a licence as referred to in Article 2:96.’

The dispute in the main proceedings and the question referred for a preliminary ruling
IMC is a Netherlands firm which trades in securities for its own account.
On 11 October 2005, consulting the information published by the Euronext Amsterdam market, IMC established that the ABN AMRO
bank had placed a ‘stop loss order’ on 5 000 Wereldhave shares. Pursuant to that order, those shares automatically had to
be sold at the best price possible as soon as the triggering threshold indicated by ABN AMRO was reached.
IMC sought to establish what was the triggering threshold set by ABN AMRO. After calculating a hypothetical threshold, IMC
refined its estimate by testing its hypothesis on 12 October 2005 by placing and then withdrawing sell orders before official
hours at various prices. As a result, IMC estimated that ABN AMRO’s order would be triggered at a price of EUR 77.75.
On 19 October 2005, the price of Wereldhave shares fluctuated between EUR 81.30 and EUR 80. The average volume of transactions
was 70 000. IMC thereafter proceeded in two phases.
IMC first of all placed a purchase order on Wereldhave shares at a price of EUR 73, for a total volume of 10 000 shares. This
was an ‘iceberg order’, that is to say, an order the total quantity of which did not appear in the order books. The price
of EUR 73 was approximately 10% lower than the applicable price of the shares, but just above the threshold at which the listing
of that share would have been automatically suspended, namely EUR 72.95.
Approximately two minutes later, when Wereldhave shares were being quoted at around EUR 80.40, IMC placed an order for the
sale of 10 000 Wereldhave shares with a limit of EUR 76.50. The partial execution of that order had the effect of causing
the share price to fall to EUR 76.50. That fall in turn triggered ABN AMRO’s order to sell and caused a further fall, from
EUR 76.50 to EUR 73, the level corresponding to IMC’s purchase order. As a result, IMC was able to acquire 4 350 Wereldhave
shares from ABN AMRO at EUR 73. This last phase did not last longer than one second.
Shortly thereafter, a new transaction involving the shares in question made it possible for their price to be set at EUR 80.15.
The transaction enabled IMC to realise a profit of almost 10% within a few minutes.
On 24 August 2006, Stichting Autoriteit Financiële Markten decided that those facts constituted a prohibited market manipulation
and it fined IMC approximately EUR 87 000 for breaching Article 46b(1)(b) of the 1995 Law.
By a ruling of 20 December 2007, the Rechtbank (District Court) Rotterdam reduced the amount of the fine to EUR 20 000.
IMC appealed against that ruling to the College van Beroep voor het bedrijfsleven (Administrative Court for Trade and Industry).
That court asks whether a sudden fluctuation in the price of a share, such as that at issue in the main proceedings, can come
within the scope of Article 46b(1)(b) of the 1995 Law on the supervision of securities transactions, in so far as under that
provision it is prohibited: ‘to undertake, or cause the undertaking of, transactions or to place, or cause the placing of,
orders to trade with a view to securing (
houden
) the price of those securities at an artificial level’. The specific question is whether that clause refers only to abnormal
or artificial price stabilisation or also embraces an abnormal or artificial price change.
The referring court points out that it is unable, by reason of the nuances in the different language versions of Directive
2003/6, to draw any unambiguous conclusions as to the meaning of the verb ‘houden’ in the Dutch-language version of Article
1(2)(a), second indent, of that directive.
It was in those circumstances that the College van Beroep voor het bedrijfsleven decided to stay proceedings and to refer
the following question to the Court of Justice for a preliminary ruling:
‘Must the second indent of Article 1(2)(a) of [Directive 2003/6] be interpreted as meaning that the bringing about of price
changes in a time span such as that at issue through the commission of a combination of acts with a financial instrument,
namely transactions and orders to trade such as [those at issue in the main proceedings], should be regarded as “houden” (literally
“maintaining”) [the price of] such an instrument at an abnormal or artificial level?’

The question referred for a preliminary ruling
The referring court asks, in essence, whether Article 1(2)(a), second indent, of Directive 2003/6 must be interpreted as requiring,
in order for the price of one or more financial instruments to be considered to have been fixed at an abnormal or artificial
level, that that price must maintain an abnormal or artificial level for more than a certain duration.
It should be noted that the Dutch-language version of Article 1(2)(a), second indent, of Directive 2003/6 uses the verb ‘houden’
(to maintain). The Dutch‑language version reads as follows: ‘“Marktmanipulatie”: a) transacties of handelsorders … waarbij
een of meer personen samenwerken om de koers van een financieel instrument op een abnormaal of een kunstmatig niveau te houden.’
That wording, which translates literally as ‘“Market manipulation”: … transactions or orders to trade … by which a person,
or persons acting in collaboration, maintain the price of one or several financial instruments at an abnormal or artificial
level’ could suggest that only conduct by which, during a certain time span, the price was maintained at an abnormal or artificial
level falls within the meaning of market manipulation.
However, for the purpose of its interpretation, Article 1(2)(a), second indent, of Directive 2003/6 cannot be examined solely
in the Dutch-language version.
According to settled case-law, the need for uniform application and, accordingly, for uniform interpretation of an EU measure
makes it impossible to consider one version of the text in isolation, but requires that it be interpreted on the basis of
both the real intention of its author and the aim which the latter seeks to achieve, in the light, in particular, of the versions
in all languages (see, inter alia, Case 29/69
Stauder
[1969] ECR 419, paragraph 3; Joined Cases C‑261/08 and C‑348/08
Zurita García and Choque Cabrera
[2009] ECR I‑10143, paragraph 54; and Case C‑473/08
Eulitz
[2010] ECR I‑0000, paragraph 22).
As it is, versions of Article 1(2)(a), second indent, of Directive 2003/6 in languages other than Dutch contain no information
which would allow the conclusion to be drawn that only conduct which has the effect of maintaining the price of one or more
relevant financial instruments at an abnormal or artificial level for a certain period of time may constitute ‘market manipulation’
within the meaning of that provision. By contrast, it follows from, inter alia, the versions in Spanish (‘aseguren … el precio’),
Danish (‘sikrer at kursen’), German (‘den Kurs … in der Weise beeinflussen, dass ein … Kursniveau erzielt wird’), English
(‘secure … the price’), French (‘fixent … le cours’), Italian (‘fissare … il prezzo’), Portuguese (‘assegurem … o preço’),
Finnish (‘varmistaa … hinnan’) and Swedish (‘låser fast priset’), that it is sufficient if the conduct in question has led
to the setting of the price of one or more financial instruments at an abnormal or artificial level in order for it to come
within the meaning of market manipulation. Article 1(2)(a), second indent, of Directive 2003/6 does not require, among the
factors constituting market manipulation, that the price of the financial instrument or instruments at issue must maintain
an abnormal or artificial level for a certain duration.
In that respect, it should be noted that the purpose of Directive 2003/6 – as is reiterated, in particular, in recitals 2
and 12 in the preamble thereto – is to protect the integrity of EU financial markets and to enhance investor confidence in
those markets. That confidence depends on, inter alia, investors being placed on an equal footing and protected against the
improper use of insider information and price manipulations (see, to that effect, Case C‑45/08
Spector Photo Group and Van Raemdonck
[2009] ECR I‑0000, paragraph 47).
The EU legislature took the view, as is stated in recital 15 in the preamble to Directive 2003/6, that insider dealing and
market manipulation prevent full and proper market transparency, which is a prerequisite for trading for all economic actors
in integrated financial markets.
The objectives thus pursued by Directive 2003/6 would be undermined if conduct such as that contemplated in Article 1(2)(a),
second indent, of that directive could fall outside the scope of the prohibition of market manipulation set out in Article
5 of that directive solely on the ground that it gave rise to a single transaction and, consequently, a single listing, without
the price of the financial instrument or instruments at issue maintaining an abnormal or artificial level for more than a
certain duration.
The answer to the question referred is therefore that Article 1(2)(a), second indent, of Directive 2003/6 must be interpreted
as not requiring, in order for the price of one or more financial instruments to be considered to have been fixed at an abnormal
or artificial level, that that price must maintain an abnormal or artificial level for more than a certain duration.

Costs
Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court,
the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs
of those parties, are not recoverable.
On those grounds, the Court (Second Chamber) hereby rules:
Article 1(2)(a), second indent, of Directive 2003/6/EC of the European Parliament and of the Council of 28 January 2003 on
insider dealing and market manipulation (market abuse) must be interpreted as not requiring, in order for the price of one
or more financial instruments to be considered to have been fixed at an abnormal or artificial level, that that price must
maintain an abnormal or artificial level for more than a certain duration.
[Signatures]
*
Language of the case: Dutch.