WRITTEN QUESTION E-2860/00

by Antonios Trakatellis (PPE-DE) and Ioannis Marínos (PPE-DE) to the Commission

(14 September 2000)

Subject: Manipulation and government intervention on the Athens Stock Exchange squandering of public funds

Reports in the Greek press, to which there has been no response, and a complaint by a leading member of the opposition, which was investigated on the orders of the Public Prosecutor of the Supreme Court of Greece, strongly suggest that the public company dealing in transferable securities (DEKA) and various government-controlled credit institutions intervened on the Athens Stock Exchange before the elections on 9 April with the aim of influencing the outcome of those elections. More specifically, the government bodies concerned bought shares in government companies over a number of days to support prices artificially prior to the elections while subsequently selling them on at very low prices, making huge losses for taxpayers and shareholders alike.

1. Do these acts, and in particular DEKA's part in affecting the Athens Stock Exchange share index, not constitute an attempt to manipulate the Exchange, which is contrary to the spirit of recommendation 77/534/EEC(1) concerning a European code of conduct relating to transactions in transferable securities?

2. Given that the Board of the company in question and that of other institutions are appointed by the Government who dictate their investment policy, is this not a case of fraudulent competition and distortion of the free fluctuation of the stock exchange share and securities index?

3. What measures will the Commission take in this regard? Does it intend to prevent such occurrences by incorporating them into its draft proposal for a directive to combat manipulation of the markets which, according to its action programme on financial services (1999 interim report), is to be submitted by the end of 2000?

(1) OJ L 212, 20.8.1977, p. 37.

Answer given by Mr Bolkestein on behalf of the Commission

(24 October 2000)

In order to create a common European market for capital and securities, several directives have been adopted to harmonise the standards in the national securities legislation. However, no provisions have yet been agreed at Community level to deal with market manipulation.

Directive 89//592/EEC of 13 November 1989 coordinating regulations on insider dealing(1) limits itself to preventing the misuse of privileged information. Other directives dealing with protection of markets and investors are Council Directive 79/279/EEC of 5 March 1979 coordinating the conditions for the admission of securities to official stock exchange listing(2), Council Directive 80/390/EEC of 17 March 1980 coordinating the requirements for the drawing up, scrutiny and distribution of the listing particulars to be published for the admission of securities to official stock exchange listing(3), and Council Directive 93/22/EEC of 10 May 1993 on investment services in the securities field(4).

None of these directives gives the Commission any powers in the field of market manipulation.

Commission Recommendation 77/534/EEC of 25 July 1977 concerning a European code of conduct relating to transactions in transferable securities(5) limits itself to recommending to Member States that they should ensure the observation of certain basic and widely recognised principles. In part IV No 13 of the Recommendation it is stated that, In recommending the European code of conduct to the Member States, the Commission is of course well aware that a recommendation does not bind the States as to the results to be achieved.

The Commission therefore has no powers to intervene in a case of suspected market manipulation. Powers for the detection, investigation and punishment of market manipulation remain completely in the hands of national authorities. Market manipulation is banned and sanctioned in most of the Member States by national law. Under Greek legislation, price manipulation through certain practices is prohibited and administrative and criminal sanctions may be imposed by the national authorities.

The financial services action plan stated that by the end of 2000, the Commission would bring forward a proposal for a directive addressing market manipulation. The Commission is preparing such a proposal. The aim of such a directive would be to ensure the integrity of European financial markets, to establish common standards throughout Europe, and to enhance investors' confidence in these markets. The Commission's proposal will provide common European standards against market manipulation, applicable to everyone (i.e. all natural and legal persons) as well as to governments.

(1) OJ L 334, 18.11.1989.

(2) OJ L 66, 16.3.1979.

(3) OJ L 100, 17.4.1980.

(4) OJ L 141, 11.6.1993.

(5) OJ L 212, 20.8.1977.