WRITTEN QUESTION E-3460/01

by Charles Tannock (PPE-DE) and Theresa Villiers (PPE-DE) to the Commission

(14 December 2001)

Subject: The legality of provisions contained within the Directive on insider trading and market manipulation

Article 1(2)(b) of the Commission's proposal for a Directive on insider dealing and market manipulation (market abuse)(1) states that for the purposes of the Directive Market Manipulation shall mean 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 the supply, demand or price of financial instruments, including the dissemination of rumours and false or misleading news.

The importance of protection the public from bad advice notwithstanding, does the Commission now accept that the failure to distinguish in the Directive between deliberate attempts to manipulate markets for personal gain and not the reporting of information in good faith would make enactment of the Directive in its present form not only oppressive but inconsistent with the provisions in the European Convention of Human Rights dealing with freedom of expression and the obligations of Member States to uphold the Convention as expressed in Article 6 of The Consolidated Treaty on European Union?

(1) OJ C 240 E, 28.8.2001, p. 265.

Answer given by Mr Bolkestein on behalf of the Commission

(11 February 2002)

Describing professional journalistic behaviour (reporting of information in good faith), the Honourable Member mentions the respective article of the proposed Directive, which is complemented by recital 24 referring to the Charter of Fundamental Rights of the European Union. Considering these elements the intention of the Commission is of course not to restraint the freedom of expression or to put unnecessary burdens on bona fide journalistic work. Moreover the Commission does not believe this could be the effect. Therefore, the Commission considers the current text does not endanger any person acting for proper journalistic purposes.

Considering private behaviour of journalists, the proposed Directive follows the principle of equal treatment that underlies all legislation. The general prohibitions in the proposal should be applicable to everyone, whatever the profession of the person involved. If retail investors for example have to fully respect the prohibitions, even though they may be acting for the first time on a financial market, then it is difficult to see why other people working in a professional capacity on the same markets, or giving advice to other market participants should be treated any differently.

The Commission does not see any inconsistency in the provisions of the proposed Directive with those of the European Convention of Human Rights dealing with the freedom of expression and the obligations of Member States to uphold the Convention as expressed in Article 6 of the Treaty on the European Union.

The Commission's intention, in conformity with the subsidiarity principle, is to leave it up to the Member States whether, or not, to apply any specific provisions to journalists. Since the Directive is addressed to Member States and since all Member States have signed the European Convention on Human Rights, its transposition into national law will have to fully respect the Human Rights obligations.