WRITTEN QUESTION P-3932/00 by Francesco Turchi (UEN) to the Commission. Conflict of interests on the stock market.
Date: 2000-12-06
Institutions: European Parliament, Provisional data
Subjects: access to information, financial market, information medium, investment company, share

6.6.2001

EN

Official Journal of the European Communities

C 163 E/227

Answer given by Mrs Reding on behalf of the Commission

(22 January 2001)

According to the information provided by the national agencies responsible for implementing the Socrates
programme, students(cid:146) socio-economic circumstances are taken into account as follows in the allocation of
Erasmus mobility grants: in countries where students automatically receive assistance from the state, which
they retain when they go abroad as part of their education (generally the Scandinavian countries), socio-
economic factors are taken into account essentially at this level. In countries where the state provides no
systematic financial support, students who are less well-off generally receive supplementary assistance from
their home university(cid:146)s own funds or from regional funds; some countries base calculations for the
Erasmus grant entirely on students(cid:146) socio-economic level by defining several categories and different grant
levels for each, with the well-off students not receiving any grant but being entitled to the Erasmus (cid:145)label(cid:146)
and all the advantages which go with it. The Commission is currently analysing the 1999 student mobility
figures for the individual countries. When they have been finalised, the results of this analysis, particularly
concerning the extent to which socio-economic factors are taken into account, will be forwarded directly
to the parties concerned and to the Honourable Member.

(2001/C 163 E/268)

WRITTEN QUESTION P-3932/00

by Francesco Turchi (UEN) to the Commission

(6 December 2000)

Subject: Conflict of interests on the stock market

Brokerage firms and merchant banks which place securities on the stock market often produce information
leaflets of questionable accuracy as regards both analyses, future prospects, management background and
solvency. One can understand that these analyses, devoid of any indication of critical value, are influenced
by the broker(cid:146)s desire to see the security do well, revealing an obvious conflict of interests with those
companies which are assessed favourably. Furthermore, merchant banks which are concerned with
increasing the capital of companies quoted on the stock market and suggest that investors buy shares,
and banks which have granted loans to companies launched on the stock market by the same credit
institution clearly show how widespread and influential the conflict of interests on the stock market is. It is
also well-known that no financial
institution ever openly admits to holding shares in the companies
analysed, and no efficient system of verification and checks has been introduced.

In the light of the above, does the Commission:

1. wonder about the accuracy of the prospectuses published when companies are floated on the stock

market;

2. wonder how independent the advice or recommendations issued in the reports drawn up by analysts

are;

3.

consider that this conflict of interests inevitably jeopardises investors and the integrity and credibility
of the market;

4.

intend to take any steps to safeguard savers and investors on the stock market?

Answer given by Mr Bolkestein on behalf of the Commission

(9 January 2001)

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.

C 163 E/228

Official Journal of the European Communities

EN

6.6.2001

Investment firms providing investment services (among which underwriting and placing) are obliged to
respect national legislation implementing Council Directive 93/22/EEC of 10 May 1993 on provision of
investment services in the securities field (1) (investment services Directive). Article 11 of the said Directive
expressly requires that the intermediary acts honestly and fairly in conducting its activities in the best
interest of its client, makes adequate disclosure of material information in its dealing with its client and
tries to avoid conflicts of interest and, when these cannot be avoided, ensures that its clients are fairly
treated.

As far as prospectuses are concerned, 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 (2) requires that the prospectus contain the
information which is necessary to enable the investors and their advisors to make an informed assessment
of the assets and the liabilities, financial position, profit and losses and prospect of the issuer and of the
right attaching to the securities. The listing particulars have to be approved by the competent authorities.
However, the responsibility for their content is on the persons responsible for drafting the prospectus.
Those persons are required to declare that to the best of their knowledge, the information given in the
prospectus is in accordance with the facts and contains no omissions likely to affect the assessment of the
issuers or the securities. Violations to these obligations are sanctioned according to national legislation.

Publication of financial research and analysis falls, however, outside the scope of the above directives,
because it cannot be qualified as provision of investment services to the public.

No other provisions have been agreed on rules for publication of financial research and analysis by
financial intermediaries.

According to the financial services action plan the Commission is required to put forward a new
prospectus directive and to upgrade the investment services Directive (93/22/EEC) as well as a new
directive to improve investor protection. The Commission has recently published a communication on
upgrading the investment services Directive (3). This communication is intended to open a wide debate on
several issues including the question of the definition of investment services and conduct of business rules.

The action plan provides also for an updating of the directive on prospectuses.

In addition, the Commission is drafting a proposal for a new directive on market abuse which should also
cover the provision of false information affecting the price of the securities traded on regulated markets.

(1) OJ L 141, 11.6.1993.
(2) OJ L 100, 17.4.1980.
(3) COM(2000) 729 final.

(2001/C 163 E/269)

WRITTEN QUESTION P-3934/00

by Theodorus Bouwman (Verts/ALE) to the Commission

Subject: Emission standards for diesel locomotives

(6 December 2000)

The transport of goods by rail needs to be modernised in line with developments in road transport and
inland waterways. Modern inland waterways vessels and freight vehicles (Euro III) are subject to (more)
stringent emission standards. In contrast to developments in the United States, there are no rules in the
locomotives. According to the National Traffic and Transport Plan (of
European Union on diesel
14 October 2000), the Netherlands is working within the EU towards introducing emission standards for
diesel locomotives.

To what extent
locomotives appear as a separate category (Annex I: Scope)?

is the Commission considering modifying directive 97/68/EC (1)

in which railway