Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on criminal sanctions for insider dealing and market manipulation
Date: 2011-10-20
Institutions: European Commission
Subjects: discriminatory price, economic offence, insider trading, penalty, restriction on competition, selective dissemination of information, stock-exchange transaction

EUROPEAN COMMISSION 

Brussels, 20.10.2011 
COM(2011) 654 final 

2011/0297 (COD) 

Proposal for a 

DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

on criminal sanctions for insider dealing and market manipulation 

{SEC(2011) 1217} 
{SEC(2011) 1218} 

 
 
  
 
EXPLANATORY MEMORANDUM 

1. 

CONTEXT OF THE PROPOSAL 

Adopted in early 2003, the Market Abuse Directive (MAD) 2003/6/EC introduced a 
comprehensive  framework  to  tackle  insider  dealing  and  market  manipulation 
practices,  jointly  referred  to  as  "market  abuse".  The  Directive  aims  to  increase 
investor  confidence  and  market  integrity  by  prohibiting  those  who  possess  inside 
information  from  trading  in  related  financial  instruments,  and  by  prohibiting  the 
manipulation  of  markets  through  practices  such  as  spreading  false  information  or 
rumours and conducting trades which secure prices at abnormal levels. 

to  ensure, 

in  conformity  with  national 

In  order  to  ensure  the  enforcement  of  Directive  2003/6/EC,  Member  States  are 
required 
the  appropriate 
administrative measures can be taken or administrative sanctions be imposed against 
the  persons  responsible  where  the  provisions  adopted  in  implementation  of  the 
Directive have not been complied with. This requirement is without prejudice to the 
right of Member States to impose criminal sanctions. 

law, 

that 

The  report  by  the  High-Level  Group  on  Financial  Supervision  in  the  EU1 
recommended  that  a  "sound  prudential  and  conduct  of  business  framework  for  the 
financial  sector  must  rest  on  strong  supervisory  and  sanctioning  regimes".  To  this 
end,  the  Group  considers  that  supervisory  authorities  must  be  equipped  with 
sufficient  powers  to  act  and  should  be  able  to  rely  on  "equal,  strong  and  deterrent 
sanctions  regimes  against  all  financial  crimes,  sanctions  which  should  be  enforced 
effectively". 

Effective  enforcement  requires  that,  in  accordance  with  article  14  of  Directive 
2003/6/EC,  sanctions  are  available  to  the  competent  authorities  that  are  "effective, 
proportionate  and  dissuasive  In  addition,  effective  enforcement  also  relates  to  the 
resources  of competent  authorities,  their powers and their willingness to detect and 
investigate abuses. However, the High-Level Group considers that "none of these is 
currently in place" and Member States sanctioning regimes are regarded as in general 
weak and heterogeneous. 

To  this  end,  the  Commission  has  published  a  Communication2  with  regard  to 
sanction  regimes  in  the  financial  sector.  The  Communication  argues  that  criminal 
sanctions,  in  particular  imprisonment,  are  generally  considered  to  send  a  strong 
message of disapproval that could increase the dissuasiveness of sanctions, provided 
that they are appropriately applied by the criminal justice system. However, criminal 
sanctions  may  not  be  appropriate  for  all  types  of  violations  and  in  all  cases.  The 
Communication  concludes  that  the  Commission  will  assess  whether  and  in  which 
areas the introduction of criminal sanctions, and the establishment of minimum rules 
on  the  definition  of  criminal  offences  and  sanctions  may  prove  to  be  essential  in 
order to ensure the effective implementation of EU financial services legislation. 

1 
2 

Report of the High-Level Group on Financial Supervision in the EU, Brussels, 25.2.2009, p. 23. 
European  Commission,  Communication  on  Reinforcing  sanctioning  regimes  in  the  financial  sector, 
COM (2010) 716, 8 December 2010. 

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The  proposal  follows  the  approach  set  out  in  the  Communication  of  20  September 
2011  "Towards  an  EU  criminal  policy  –  Ensuring  the  effective  implementation  of 
EU  policies  through  criminal  law"3.  This  includes  an  assessment,  based  on  clear 
factual evidence, an assessment of the national enforcement regimes in place and the 
added  value  of  common  EU  minimum  criminal  law  standards,  taking  into  account 
the principles of necessity, proportionality and subsidiarity.  

the  application  of 

In  line  with  the  Stockholm  Programme  and  the  conclusions  of  the  JHA  Council  of 
22 April 2010 on economic crisis prevention and support for economic activity4, the 
European  Commission  has  assessed 
the  national  rules 
implementing  the  MAD  and  has  identified  a  number  of  problems  which  have 
negative  impacts  in  terms  of  market  integrity  and  investor  protection.  One  of  the 
problems identified in the impact assessment is the fact that the sanctions currently in 
place  to  fight  market  abuse  offences  are  lacking  impact  and  are  insufficiently 
dissuasive, which results in ineffective enforcement of the Directive. In addition, the 
definition  of  which  insider  dealing  or  market  manipulation  offences  constitute 
criminal  offences  diverges  considerably  from  Member  State  to  Member  State.  For 
example, five Member States do not provide for criminal sanctions for disclosure of 
inside  information  by  primary  insiders  and  eight  Member  States  do  not  do  so  for 
secondary  insiders.  In  addition,  one  Member  State  does  not  currently  impose 
criminal sanctions for insider dealing by a primary insider and four do not do so for 
market  manipulation.  Since  market  abuse  can  be  carried  out  across  borders,  this 
divergence undermines the internal market and leaves a certain scope for perpetrators 
of  market  abuse  to  carry  such  abuse  in  jurisdictions  which  do  not  provide  for 
criminal sanctions for a particular offence. 

Minimum  rules  on  criminal  offences  and  on  criminal  sanctions  for  market  abuse, 
which  would  be  transposed  into  national  criminal  law  and  applied  by  the  criminal 
justice systems of the Member States, can contribute to ensuring the effectiveness of 
this  Union  policy  by  demonstrating  social  disapproval  of  a  qualitatively  different 
nature  compared  to  administrative  sanctions  or  compensation  mechanisms  under 
civil  law.  Criminal  convictions  for  market  abuse  offences,  which  often  result  in 
widespread  media  coverage,  help  to  improve  deterrence  as  as  they  demonstrate  to 
potential  offenders  that  the  authorities  take  serious  enforcement  action  which  can 
result  in  imprisonment  or  other  criminal  sanctions  and  a  criminal  record.  Common 
minimum  rules  on  the  definition  of  criminal  offences  for  the  most  serious  market 
abuse offences facilitate the cooperation of law enforcement authorities in the Union, 
especially considering that the offences are in many cases committed across borders. 

Although the rules of preventing and fighting market abuse offences are in place at 
EU  level  since  2003,  experience  shows  that  the  desired  effect,  i.e.  contributing 

3 
4 

COM (2011) 573 final. 
In  its  "Stockholm  Programme  –  an  open  and  secure  Europe  serving  and  protecting  citizens"  of 
2.12.2009, the European Council emphasised the need to regulate financial markets and prevent abuse 
and invited the Member States and the Commission to improve the detection of market abuse and the 
misappropriation of funds. The JHA Council conclusions on economic crisis prevention and support for 
economic  activity,  stressed  that  consideration  could  be  given  to  whether  it  is  possible  or,  as  the  case 
may  be,  appropriate  to  harmonise  criminal  laws  regarding  the  handling  of  serious  stock  market  price 
manipulations and other misconduct relating to securities markets. See Docc. 8920/10 of 22.4.2010 and 
7881/10 of 29.3.2010 

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effectively  to  the  protection  of  the  financial  markets,  has  not  been  achieved  by  the 
current  system.  While  proposals  to  strengthen  and  ensure  the  coherence  of 
administrative sanctions are included in the proposal for a Regulation (EU) No…of 
the European Parliament and the Council on insider dealing and market manipulation 
that also intends to remedy other major problems in the existing system, this proposal 
lays  down  a  requirement  for  Member  States  to  provide  for  minimum  rules  on  the 
definition  of  the  most  serious  market  abuse  offences  and  on  minimum  levels  of 
criminal sanctions attached to them. 

2. 

RESULTS OF CONSULTATIONS WITH THE INTERESTED PARTIES AND 
IMPACT ASSESSMENTS 

The  initiative  is  the  result  of  consultations  with  all  major  stakeholders,  including 
public authorities (governments and securities regulators), issuers, intermediaries and 
investors. 

It  takes  into  consideration  the  report  published  by  the  Committee  of  European 
Securities  Regulators  (CESR)  on  administrative  measures  and  sanctions  as  well  as 
criminal  sanctions  available  in  Member  States  under  the  market  abuse  directive 
(MAD)5.  It  also  takes  into  account  the  results  of  the  consultation  launched  by  the 
Commission  in  its  Communication  on  reinforcing  sanctioning  regimes  in  the 
financial sector. 

On  12  November  2008  the  European  Commission  held  a  public  conference  on  the 
review  of  the  market  abuse  regime6.  On  20  April  2009,  the  European  Commission 
launched  a  call  for  evidence  on  the  review  of  the  Market  Abuse  Directive.  The 
Commission  services  received  85  contributions.  The  non-confidential  contributions 
can be consulted in the Commission website7. 

On 28 June 2010 the Commission launched a public consultation on the revision of 
the Directive which closed on 23 July 20108. The Commission services received 96 
contributions.  The  non-confidential  contributions  can  be  consulted 
the 
Commission  website9.  A  summary  is  found  in  Annex  2  to  the  impact  assessment 
report10.  On  2  July  2010,  the  Commission  held  a  further  public  conference  on  the 
review of the Directive11. 

in 

In  line  with  its  "Better  Regulation"  policy,  the  Commission  conducted  an  impact 
assessment  of  policy  alternatives.  Policy  options  related  to  criminal  sanctions  were 
considered as part of this preparatory work. The impact assessment concluded on this 
point  that  requiring  Member  States  to  introduce  criminal  sanctions  for  the  most 
serious market abuse offences was essential to ensure the effective implementation of 
the Union policy on market abuse. In combination with the preferred policy options 

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11 

CESR/08-099, February 2008. 
See http://ec.europa.eu/internal_market/securities/abuse/12112008_conference_en.htm. 
See http://ec.europa.eu/internal_market/consultations/2009/market_abuse_en.htm 
See http://ec.europa.eu/internal_market/consultations/docs/2010/mad/consultation_paper.pdf 
See http://ec.europa.eu/internal_market/consultations/2010/mad_en.htm 
The impact assessment report can be found on 
http://ec.europa.eu/internal_market/securities/abuse/index_en.htm 
See Annex 3 of the impact assessment report for a summary of the discussions. 

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addressed  in  the  proposal  for  a  Regulation  (EU)  No…of  the  European  Parliament 
and the Council on insider dealing and market manipulation, this will have a positive 
impact on investors' confidence and will further contribute to the financial stability of 
financial markets. 

3. 

LEGAL ELEMENTS OF THE PROPOSAL 

3.1. 

Legal basis  

The proposal is based on Article 83.2 of the TFEU. 

3.2. 

Subsidiarity and proportionality  

According to the principle of subsidiarity (Article 5.3 of the TEU), action at EU level 
should  be  taken  only  when  the  aims  envisaged  cannot  be  achieved  sufficiently  by 
Member  States  alone  and  can  therefore,  by  reason  of  the  scale  or  effects  of  the 
proposed action, be better achieved by the EU. 

Market abuse can occur across borders and harms the integrity of financial markets 
which  are  increasingly  integrated  in  the  Union.  The  divergent  approaches  to  the 
imposition of criminal sanctions for market abuse offences by Member States leave a 
certain  scope  for  perpetrators  who  can  often  make  use  of  the  most  lenient  sanction 
systems. This undermines both the deterrent effect of each national sanction regime 
and the effectiveness of enforcement of the Union's legislative framework on market 
abuse. EU-wide minimum rules on the forms of market abuse that are considered to 
be a criminal conduct contribute to addressing this problem. 

Against this background EU action appears appropriate in terms of the principle of 
subsidiarity. 

The  principle  of  proportionality  requires  that  any  intervention  is  targeted  and  does 
not go beyond what is necessary to achieve the objectives. This principle has guided 
the process from the identification and evaluation of alternative policy options to the 
drafting of this proposal. 

3.3. 

Detailed explanation of the proposal 

3.3.1.  Criminal offences 

Article  3  in  conjunction  with  Article  2  of  the  proposal  defines  the  market  abuse 
offences  which  should  be  regarded  as  criminal  offences  by  Member  States  and 
therefore be subject to criminal sanctions. 

Two  forms  of  market  abuse  conduct,  namely 
insider  dealing  and  market 
manipulation,  should  be  regarded  as  criminal  offences  if  committed  intentionally. 
The  attempt  to  commit  insider  dealing  and  market  manipulation  should  also  be 
punishable as a criminal offence. 

The  offence  relating  to  inside  information  should  apply  to  persons  who  possess 
inside  information  of  which  they  know  that  it  is  inside  information.  The  offence 
relating to market manipulation is applicable to anybody. 

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3.3.2. 

Inciting, aiding and abetting and attempt 

Article  4  ensures  that  inciting  as  well  as  aiding  and  abetting  the  defined  criminal 
offences  are  also  punishable  in  Member  States.  The  attempt  to  commit  one  of  the 
offences  defined  in  Articles  3  and  4  is  also  covered  by  the  Directive  with  the 
exception  of  improper  disclosure  of  inside  information  and  dissemination  of 
information which gives false or misleading signals, as it does not seem appropriate 
to define attempts to commit these offences as criminal offences. 

3.3.3.  Criminal sanctions 

Article  5  requires  Member  States  to  take  the  necessary  measures  to  ensure  that  the 
criminal  offences  identified  in  Articles  3  and  4  are  subject  to  criminal  sanctions. 
These sanctions should be effective, proportionate and dissuasive. 

3.3.4.  Liability of legal persons 

Article 6 requires Member States to ensure that legal persons can be held liable for 
the criminal offences defined in Articles 3 and 4. 

4. 

BUDGETARY IMPLICATIONS  

The proposal has no implications for the Union budget. 

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2011/0297 (COD) 

Proposal for a 

DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

on criminal sanctions for insider dealing and market manipulation 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty on the Functioning of the European Union, and in particular Article 83 (2) 
thereof, 

Having regard to the proposal from the European Commission, 

After transmission of the draft legislative act to the national Parliaments, 

Having regard to the opinion of the European Economic and Social Committee12, 

, 

Acting in accordance with the ordinary legislative procedure, 

Whereas: 

(1) 

(2) 

(3) 

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. 

Directive  2003/6/EC13  of  the  European  Parliament  and  the  Council  on  insider  dealing  and 
market  manipulation  (market  abuse)  required  Member  States  to  ensure  that  competent 
authorities  have  the  powers  to  detect  and  investigate  market  abuse.  Without  prejudice  to  the 
right  of  Member  States  to  impose  criminal  sanctions,  Directive  2003/6/EC  also  required 
Member  States  to  ensure  that  the  appropriate  administrative  measures  can  be  taken  or 
administrative  sanctions  be  imposed  against  the  persons  responsible  for  violations  of  the 
national rules implementing that Directive. 

The report by the High-Level Group on Financial Supervision in the EU recommended that a 
sound prudential and conduct of business framework for the financial sector must rest on strong 
supervisory  and  sanctioning  regimes.  To  this  end,  the  Group  considered  that  supervisory 
authorities must be equipped with sufficient powers to act and there should also be equal, strong 
and deterrent sanctions regimes against all financial crimes, sanctions which should be enforced 

12 
13 

OJ C , , p. . 
OJ L 16, 12.4.2003, p.16. 

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(4) 

(5) 

(6) 

(7) 

(8) 

(9) 

effectively. The Group concluded that Member States sanctioning regimes are in general weak 
and heterogeneous. 

A well-functioning legislative framework on market abuse requires effective enforcement. An 
evaluation  of  the  national  regimes  for  administrative  sanctions  under  Directive  2003/6/EC 
showed that not all national competent authorities had a full set of powers at their disposal to 
ensure that they could respond to market abuses with the appropriate sanction. In particular, not 
all  Member  States  had  pecuniary  administrative  sanctions  available  for  insider  dealing  and 
market manipulation, and the level of these sanctions varied widely among Member States. 

The  adoption  of  administrative  sanctions  by  the  Member  States  has  proven  insufficient  to 
ensure compliance with the rules on preventing and fighting market abuse. 

It  is  essential  that  compliance  be  strengthened by  the  availability  of  criminal  sanctions  which 
demonstrate a social disapproval of a qualitatively different nature compared to administrative 
penalties. Establishing criminal offences for the most serious forms of market abuse sets clear 
boundaries in law that such behaviours are regarded as unacceptable and sends a message to the 
public and potential offenders that these are taken very seriously by competent authorities. 

Not all Member States have provided for criminal sanctions for some forms of serious breaches 
of  national  legislation  implementing  Directive  2003/6/EC.  These  different  approaches 
undermine  the  uniformity  of  conditions  of  operation  in  the  internal  market  and  may  provide  an 
incentive  for  persons  to  carry  out  market  abuse  in  Member  States  which  do  not  provide  for 
criminal  sanctions  for  these  offences.  In  addition,  until  now  there  has  been  no  Union-wide 
understanding on which conduct is considered to be such a serious breach. Therefore, minimum 
rules concerning the definition of criminal offences committed by natural and legal persons and 
of sanctions  should be  set. Common minimum rules would make it also possible to use more 
effective  methods  of  investigation  and  effective  cooperation  within  and  between  Member 
States.  Convictions  for  market  abuse  offences  under  criminal  law  often  result  in  extensive 
media  coverage,  which  helps  to  deter  potential  offenders,  as  it  draws  public  attention  to  the 
commitment of competent authorities to tackling market abuse. 

The  introduction  of  criminal  sanctions  for  the  most  serious  market  abuse  offences  by  all 
Member States is therefore essential to ensure the effective implementation of Union policy on 
fighting market abuse, in line with the requirements described in the Communication "Towards 
an EU criminal policy – Ensuring the effective implementation of EU policies through criminal 
law"14. 

In order for the scope of this Directive to be aligned with that of Regulation (EU) No…of the 
European  Parliament  and  the  Council  on  insider  dealing  and  market  manipulation,  trading  in 
own  shares  for  stabilisation  and  buy-back  programmes,  as  well  as  transactions,  orders  or 
behaviours carried out for the purposes of monetary and public debt management activities and 
activities  concerning  emission  allowances  in  pursuit  of  the  Union's  climate  policy,  should  be 
exempt from this Directive.  

14 

COM (2011) 573 final.  

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(10)  Member  States  should  be  under  the  obligation  to  subject  the  offences  of  insider  dealing  and 
market  manipulation  to  criminal  sanctions  according  to  this  Directive  only  when  they  are 
committed with intent. 

(11)  Due to the adverse effects attempted insider dealing and attempted market manipulation have on 
the integrity of the financial markets and on investor confidence in these markets, these forms 
of behaviour should also be punishable as a criminal offence. 

(12)  This Directive should also require Member States to ensure that inciting as well as aiding and 
abetting the criminal offences are  also punishable. In this context, causing another person, on 
the  basis  of  inside  information,  to  acquire  or  dispose  of  financial  instruments  to  which  that 
information relates should be considered inciting to insider dealing. 

(13)  This  Directive  should  be  applied  taking  into  account  the  legal  framework  established  by  the 
Regulation  (EU)  No…of  the  European  Parliament  and  the  Council  on  insider  dealing  and 
market manipulation and its implementing measures. 

(14) 

In order to ensure effective implementation of the European policy for ensuring the integrity of 
the  financial  markets  set  out  in  Regulation  (EU)  No…of  the  European  Parliament  and  the 
Council on insider dealing and market manipulation, Member States should also extend liability 
to legal persons, including, whenever possible, criminal liability of legal persons. 

(15)  As this Directive provides for minimum rules, Member States are free to adopt or maintain more 

stringent criminal law rules for market abuse. 

(16)  Any processing of personal data undertaken in the implementation of this Directive should be in 
compliance  with  Directive  95/46/EC  of  the  European  Parliament  and  of  the  Council  of  24 
October 1995 on the protection of individuals with regard to the processing of personal data and 
on the free movement of such data15. 

(17)  Since the objective of this Directive, namely to ensure the availability of criminal sanctions for 
the most serious market abuse offences across the Union, cannot be sufficiently achieved by the 
Member States and can therefore, by reason of the scale and effects of this Directive, be better 
achieved  at  Union  level,  the  Union  may  adopt  measures,  in  accordance  with  the  principle  of 
subsidiarity  as  set  out  in  Article  5  of  the  Treaty.  In  accordance  with  the  principle  of 
proportionality, as set out in that Article, this Directive does not go beyond what is necessary to 
achieve that objective. 

(18)  This  Directive  respects  the  fundamental  rights  and  observes  the  principles  recognised  in  the 
Charter of Fundamental Rights of the European Union as enshrined in the Treaty. Specifically, 
it  should  be  applied  with  due  respect  for  the  freedom  to  conduct  a  business  (Article  16),  the 
right to an effective remedy and to a fair trial (Article 47), the presumption of innocence and 
right of defence (Article 48), the principles of legality and proportionality of criminal offences 
and penalties (Article 49), and the right not to be tried or punished twice for the same offence 
(Article 50). 

15 

OJ L 281, 23.11.1995, p. 31. 

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(19)  The Commission should assess the implementation of this Directive in the Member States, also 
with a view to assessing a possible future need for introducing minimum harmonisation of the 
types and levels of criminal sanctions. 

(20) 

(21) 

[In  accordance  with  Articles  1,  2,  3  and  4  of  Protocol  (No  21)  on  the  position  of  the  United 
Kingdom  and  Ireland  in  respect  of  the  area  of  freedom,  security  and  justice,  annexed  to  the 
Treaty, the United Kingdom has notified its wish to participate in the adoption and application 
of this Directive] OR [Without prejudice to Article 4 of Protocol (No 21) on the position of the 
United Kingdom in respect of the area of freedom, security, and justice, annexed to the Treaty, 
the  United  Kingdom  will  not  participate  in  the  adoption  of  this  Directive  and  is  therefore  not 
bound by or be subject to its application. 

[In  accordance  with  Articles  1,  2,  3  and  4  of  Protocol  (No  21)  on  the  position  of  the  United 
Kingdom  and  Ireland  in  respect  of  the  area  of  freedom,  security  and  justice,  annexed  to  the 
Treaty,  Ireland  has  notified  its  wish  to  take  part  in  the  adoption  and  application  of  this 
Directive] OR [Without prejudice to Article 4 of Protocol (No 21) on the position of Ireland in 
respect of the area of freedom, security, and justice annexed to the Treaty, Ireland will not take 
part  in  the  adoption  of  this  Directive  and  is  therefore  not  bound  by  it  or  be  subject  to  its 
application. 

(22) 

In accordance with Articles 1 and 2 of Protocol (No 22) on the position of Denmark annexed to 
the  Treaty,  Denmark  is  not  taking  part  in  the  adoption  of  this  Directive  and  is  therefore  not 
bound by it or subject to its application. 

HAVE ADOPTED THIS DIRECTIVE: 

Article 1 
Subject matter and scope 

1. 

2. 

This Directive establishes  minimum rules for criminal sanctions for the most serious market 
abuse offences, namely insider dealing and market manipulation. 

This  Directive  does  not  apply  to  trading  in  own  shares  in  buy-back  programmes  or  for  the 
stabilisation  of  a  financial  instrument,  where  such  trading  is  carried  out  in  accordance  with 
article  3  of  Regulation  (EU)  No…of  the  European  Parliament  and  the  Council  on  insider 
dealing and market manipulation, or to transactions, orders or behaviours carried out for the 
purposes  of  monetary  and  public  debt  management  activities  and  activities  concerning 
emission allowances in pursuit of the Union's climate policy, in accordance with article 4 of 
Regulation  (EU)  No…of  the  European  Parliament  and  the  Council  on  insider  dealing  and 
market manipulation. 

3. 

This  Directive  shall  also  apply  to  behaviour  or  transactions,  including  bids,  relating  to  the 
auctioning  of  emission  allowances  or  other  auctioned  products  based  thereon  pursuant  to 

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Commission Regulation No 1031/2010. Any provisions in this Directive referring to orders to 
trade shall apply to bids submitted in the context of an auction.16 

Article 2 
Definitions 

For the purposes of this Directive: 

1. 

2. 

"Financial  instrument"  means  any  instrument  within  the  meaning  of  Article  2(1)(8)  of 
Regulation  (EU)  No…of  the  European  Parliament  and  the  Council  on  markets  in  financial 
instruments. 

"Inside  information" means information within the meaning of Article  6 of Regulation (EU) 
No…of the European Parliament and the Council on insider dealing and market manipulation. 

Article 3 
Insider dealing 

Member  States  shall  take  the  necessary  measures  to  ensure  that  the  following  conduct  constitutes  a 
criminal offence, when committed intentionally: 

(a)  when in possession of inside information, using that information to acquire or dispose of 
financial instruments to which that information relates for one's own account or for the 
account of a third party. This also includes using inside information to cancel or amend 
an order concerning a financial instrument to which that information relates where that 
order was placed before entering into possession of that inside information; or 

(b)  disclosing inside information to any other person, unless such disclosure is made in the 

lawful course of the exercise of duties resulting from employment or profession. 

Article 4 
Market manipulation 

Member  States  shall  take  the  necessary  measures  to  ensure  that  the  following  conduct  constitutes  a 
criminal offence, when committed intentionally: 

(a)  giving false or misleading signals as to the supply of, demand for, or price of, a financial 

instrument or a related spot commodity contract; 

(b) 

securing  the  price  of  one  or  several  financial  instruments  or  a  related  spot  commodity 
contract at an abnormal or artificial level; 

16 

Commission Regulation (EU) No 1031/2010 of 12 November 2010. on the timing, administration and other aspects 
of  auctioning  of  greenhouse  gas  emission  allowances  pursuant  to  Directive  2003/87/EC  of  the  European 
Parliament  and  the  Council  establishing  a  scheme  for  greenhouse  gas  emission  allowances  trading  within  the 
Community, OJ L 302, 18.11.2010, p. 1. 

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(c) 

entering  into  a  transaction,  placing  an  order  to  trade,  or  any  other  activity  in  financial 
markets  affecting  the  price  of  one  or  several  financial  instruments  or  a  related  spot 
commodity contract, which employs a fictitious device or any other form of deception or 
contrivance; 

(d)  dissemination  of  information  which  gives  false  or  misleading  signals  as  to  financial 
instruments  or  related  spot  commodity  contracts,  where  those  persons  derive,  for 
themselves  or  another  person,  an  advantage  or  profit  from  the  dissemination  of  the 
information in question. 

Article 5 
Inciting, aiding and abetting, and attempt 

1. 

2. 

Member States shall take the necessary measures to ensure that inciting, aiding and abetting 
the criminal offences referred to in Articles 3 and 4 are punishable as criminal offences. 

Member States shall take the necessary measures to ensure that the attempt to commit any of 
the  offences  referred  to  in  Articles  3(a)  and  4(a),  (b)  and  (c)  is  punishable  as  a  criminal 
offence. 

Article 6 
Criminal sanctions 

Member States shall take the necessary measures to ensure that criminal offences referred to in Articles 
3 to 5 are punishable by criminal sanctions which are effective, proportionate and dissuasive. 

Article 7 
Liability of legal persons 

1. 

2. 

Member  States  shall  take  the  necessary  measures  to  ensure  that  legal  persons  can  be  held 
liable for offences referred to in Articles 3 to 5 where such offences have been committed for 
their benefit  by  any person who has  a leading position within the  legal person,  acting either 
individually or as part of an organ of the legal person, based on: 

(a) 

a power of representation of the legal person; 

(b) 

an authority to take decisions on behalf of the legal person; or 

(c) 

an authority to exercise control within the legal person. 

Member States shall also take the necessary measures to ensure that legal persons can be held 
liable  where  the  lack  of  supervision  or  control,  by  a  person  referred  to  in  paragraph  1,  has 
made possible the commission of an offence referred to in Articles 3 to 5 for the benefit of the 
legal person by a person under its authority. 

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3. 

Liability  of  legal  persons  under  paragraphs  1  and  2  shall  not  exclude  criminal  proceedings 
against natural persons who are involved as perpetrators, inciters or accessories in the offences 
referred to in Articles 3 to 5. 

Article 8 
Sanctions for legal persons 

Member States shall take the necessary measures to ensure that legal persons held liable pursuant to 
Article 7 are punishable by effective, proportionate and dissuasive sanctions. 

Article 9 
Report 

By  [4  years  after  entry  into  force  of  this  Directive],  the  Commission  shall  report  to  the  European 
Parliament and the Council on the application of this Directive and, if necessary, on the need to review 
it, in particular with regard to the appropriateness of introducing common minimum rules on types and 
levels of criminal sanctions. 
The Commission shall submit its report accompanied, if appropriate, by a legislative proposal. 

Article 10 
Transposition 

1. 

Member States shall adopt and publish, by [24 months after entry into force of this Directive] 
at the latest, the laws, regulations and administrative provisions necessary to comply with this 
Directive. They shall forthwith communicate to the Commission the text of those provisions 
and a correlation table between those provisions and this Directive. 

They shall apply those provisions from [24 months after entry into force of this Directive] and 
subject  to  and  on  the  date  of  the  entry  into  force  of  Regulation  (EU)  No…of  the  European 
Parliament and the Council on insider dealing and market manipulation.  

When Member States adopt those provisions, they shall contain a reference to this Directive or 
be  accompanied  by  such  a  reference  on  the  occasion  of  their  official  publication.  Member 
States shall determine how such reference is to be made. 

2. 

Member  States  shall  communicate  to  the  Commission  the  text  of  the  main  provisions  of 
national law which they adopt in the field covered by this Directive and a table indicating the 
correlation between those provisions and this Directive. 

Article 12 
Entry into force 

This Directive shall enter into force on the twentieth day following that of its publication in the Official 
Journal of the European Union. 

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Article 13 
Addressees  

This Directive is addressed to the Member States in accordance with the Treaties. 

Done at Brussels, 

For the European Parliament 
The President 

For the Council 
The President 

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