CELEX: 51988PC0549
Language: en
Date: 1988-10-04
Title: AMENDMENT TO THE PROPOSAL FOR A COUNCIL DIRECTIVE COORDINATING REGULATIONS ON INSIDER TRADING

27. 10. 88                            Official Journal of the European Communities                           No C 277/13
                                                             II
                                                     (Preparatory Acts)
                                                COMMISSION
             Amendment to the proposal for a Council Directive coordinating regulations on insider
                                                         trading (')
                                               COM(88) 549 final — SYN 85
             (Presented by the Commission pursuant to the third paragraph of Article 149 of the EEC Treaty on
                                                      4 October 1988)
                                                       (88/C 277/18)
             O OJ No C 153, 11. 6. 1987, p. 8.
                     ORIGINAL PROPOSAL                                               AMENDED PROPOSAL
THE COUNCIL OF THE EUROPEAN COMMUNITIES,                         THE COUNCIL OF THE EUROPEAN COMMUNITIES,
Having regard to the Treaty establishing the European             Having regard to the Treaty establishing the European
Economic Community, and in particular Article 54                  Economic Community, and in particular Article 100 (a)
thereof,                                                          thereof,
Having regard to the proposal from the Commission,               Unchanged
Having regard      to   the  opinion   of   the   European        In cooperation with the European Parliament,
Parliament,
Having regard to the opinion of the Economic and                  Unchanged
Social Committee,
Whereas Article 54 (3) (g) provides that the Council             Whereas Article 100 (a) (1) states that the Council shall
shall coordinate to the necessary extent the safeguards           adopt the measures for the approximation of the
which, for the protection of the interests of members and         provisions laid down by law, regulation or administrative
others, are required by Member States of companies or             action in Member States which have as their object the
firms within the meaning of the second paragraph of               establishment and functioning of the internal market;
Article 58 with a view to making such safeguards
equivalent throughout the Community;
Whereas the secondary market in transferable securities           Unchanged
plays an important role in the financing of undertakings;
Whereas, for it to be able to play that role effectively,         Unchanged
every possible measure should be taken to ensure that
that market operates smoothly;
Whereas the smooth operation of the secondary market              Unchanged
depends to a large extent on the confidence it inspires in
investors;
Whereas one of the factors on which such confidence               Unchanged
depends is the assurance afforded to investors that they
are placed on an equal footing;
 ---pagebreak--- No C 277/14                            Official Journal of the European Communities                                 27. 10. 88
                     ORIGINAL PROPOSAL                                                 AMENDED PROPOSAL
Whereas insider trading, by benefiting certain investors          Unchanged
at the expense of others, is likely to undermine that
confidance and may therefore prejudice the smooth
operation of the secondary market in transferable
securities;
Whereas it is therefore necessary to take all appropriate         Unchanged
measures to combat insider trading;
Whereas in most Member States there are no rules or               Unchanged
regulations prohibiting insider trading; whereas the rules
or regulations that do exist differ appreciably between
Member States;
Whereas it is therefore necessary to adopt coordinated            Unchanged
Community rules in this field;
Whereas such coordinated rules also have the advantage            Unchanged
of helping, through cooperation between the competent
authorities, to combat transfrontier insider trading more
effectively,
HAS ADOPTED THIS DIRECTIVE:                                       HAS ADOPTED THIS DIRECTIVE:
                          Article 1                                                         Article 1
1.    Member States shall prohibit any person who, in             1.    Member States shall prohibit any person who, in
the exercise of his profession or duties, acquires inside         the exercise of his employment, profession or duties,
information as defined in Article 6 from taking                   acquires inside information as defined in Article 6 from
advantage of that information to buy or sell on their             taking advantage of that information to buy or sell on
territory, either directly or through another person,             their territory, either directly or indirectly, transferable
transferable securities admitted to trading on their stock        securities admitted to trading on their stock exchange
exchange markets.                                                 markets.
Where the purchase or sale of transferable securities is          Unchanged
carried out on a stock exchange market, it shall be
deemed to be carried out on the territory of the Member
State in which the stock exchange in question is situated
or operates.
Where the purchase or sale of transferable securities is          Unchanged
carried out outside a stock exchange market, it shall be
deemed to be carried out on the territory of the Member
State in which the counterpart of the person referred to
in the first subparagraph is resident.
2.    The prohibition laid down in paragraph 1 shall not          2.    Where the person referred to in paragraph 1 is a
apply to transferable securities bought or sold outside a         company or any other type of legal person, the
stock exchange market without the involvement of a                prohibition laid down in that paragraph shall apply to its
professional intermediary.                                        de jure or de facto directors.
                                                                  3.    Member States may provide that the prohibition
                                                                  laid down in paragraph 1 shall not apply to transferable
                                                                  securities bought or sold outside a stock exchange
                                                                  market without the involvement of a professional inter-
                                                                  mediary.
 ---pagebreak--- 27. 10. 88                             Official Journal of   European Communities                              No C 277/15
                     ORIGINAL PROPOSAL                                               AMENDED PROPOSAL
                                                                4. This Directive shall not apply to transferable
                                                                securities issued by a State or by its regional or local
                                                                authorities.
                          Article 2                                                       Article 2
Member States shall prohibit any person who is resident         Member States shall prohibit any person who is resident
on their territory and who acquires inside information in       on their territory and who acquires inside information in
the exercise of his profession or duties from:                  the exercise of his employment, profession or duties
                                                                from:
— disclosing that inside information to a third party           (a) disclosing that inside information to a third party
    unless such disclosure is made in the normal course             unless such disclosure is made in the normal course
    of exercising his profession or duties:                         of exercising his employment, profession or duties;
— using that inside information to recommend a third            (b) using that inside information to recommend a third
    party to buy or sell transferable securities admitted to        party to buy or sell transferable securities admitted to
    trading on their stock exchange markets.                        trading on their stock exchange markets.
                          Article 3                                                       Article 3
1. Member States shall impose the prohibition                   1. Member States shall impose the prohibition
provided for in Article 1 in accordance with the terms          provided for in Article 1 in accordance with the terms
referred to therein also on any person who has                  referred to therein also on any person who has
knowingly obtained inside information from a person             knowingly obtained inside information from a person
who has acquired that information in the exercise of his        who acquired that information in the exercise of his
profession or duties.                                           employment, profession or duties.
2. Member States shall prohibit any person referred to          2. Member States shall prohibit any person referred to
in paragraph 1:                                                 in paragraph 1 who is resident on their territory from:
— from disclosing the inside information to a third             (a) disclosing the inside information to a third party;
    party;
— from using that inside information to recommend a             (b) using that inside information to recommend a third
    third party to buy or sell transferable securities              party to buy or sell transferable securities admitted to
    admitted to trading on their stock exchange markets.            trading on their stock exchange markets.
                          Article 4                                                       Article 4
Member States may lay down more stringent rules than            Unchanged
those contained in this Directive provided that they are
non-discriminatory.
                          Article 5                                                       Article 5
For the purposes of this Directive transferable securities      Unchanged
shall include not only securities usually traded on the
stock exchange market such as shares and debt securities
but also traded options relating to such securities.
 ---pagebreak--- No C 277/16                            Official Journal of the European Communities                                 27. 10. 88
                     ORIGINAL PROPOSAL                                                  AMENDED PROPSAL
                          Article 6                                                         Article 6
For the purposes of this Directive, inside information is         For the purposes of this Directive, inside information is
information unknown to the public of a specific nature            information inaccessible or not available to the public of
and relating to one or more issuers of transferable               a specific nature and relating to one or more issuers of
securities, or to one or more transferable securities,            transferable securities or to one or more transferable
which, if it were published, would be likely to have a            securities, which, if it were published, would have a
material effect on the price of the transferable security or      material effect on the price of the transferable security or
transferable securities in question.                              transferable securities in question.
                          Article 7                                                         Article 7
1. Issuers whose transferable securities are admitted to          Unchanged
official listing in one or more Member States or are
traded there on another stock exchange market shall
immediately inform the public in that Member State or
those Member States of any circumstance or decision
which would be likely to have a material effect on the
price of such transferable securities.
2. Where an issuer is unable to inform the public                 Unchanged
immediately of a circumstance or decision as referred to
in paragraph 1 because disclosure would prejudice its
legitimate interests, it shall immediately inform the
competent authorities thereof, who may relieve it of the
obligation provided for in paragraph 1.
                          Article 8                                                         Article 8
1. Member States shall designate the authority or                 Unchanged
authorities competent to ensure that the provisions
adopted pursuant to this Directive are applied. They
shall inform the Commission accordingly, indicating, if
appropriate, how duties have been allocated.
2. The competent authorities shall be given all such              2. The competent authorities shall be given all such
supervisory powers as may be necessary for the exercise           supervisory and investigatory powers as may be necessary
of their duties.                                                  for the exercise of their duties.
3. The competent authorities in the Member States                 Unchanged
shall cooperate wherever necessary for the purpose of
carrying out their duties and shall exchange any infor-
mation required for that purpose.
                          Article 9                                                         Article 9
1. Member States shall provide that all persons                   Unchanged
employed or formerly employed by the competent auth-
orities referred to in Article 8 shall be bound by
professional secrecy. Information covered by professional
secrecy may not be divulged to any person or authority
except by virtue of provisions laid down by law.
 ---pagebreak--- 27. 10. 88                             Official Journal of the European Communities                          No C 277/17
                     ORIGINAL PROPOSAL                                                AMENDED PROPOSAL
2. Paragraph 1 shall not, however, preclude exchanges             Unchanged
of information between the various Member States by
the authorities referred to in Article 8 as provided for in
this Directive. Information thus exchanged shall be
covered by the obligation of professional secrecy to
which the persons employed or formerly employed by
the competent authorities receiving the information are
subject.
3. Without prejudice to cases falling under criminal              Unchanged
law, the authorities referred to in Article 8 which receive
information may use it only for the exercise of their
duties and in connection with administrative or judicial
proceedings specifically relating to the exercise of those
duties.
                         Article 10                                                       Article 10
The Contact Committee set up by Article 20 of Council             Unchanged
Directive 79/279/EEC of 5 March 1979 coordinating
the conditions for the admission of securities to official
stock exchange listing (l) shall also have as its function:
(a) to facilitate the harmonized implementation of this           Unchanged
     Directive through regular consultations on ,any
    practical problems which arise from its application
     and on which exchanges of view are deemed useful;
(b) to advise the Commission on any amendments to be              Unchanged
    made to this Directive.
                         Article 11                                                       Article 11
Member States shall determine the penalties to be                 Member States shall determine the penalties to be
applied for infringement of the measures taken pursuant           applied for infringement of the measures taken pursuant
to this Directive.                                                to this Directive. The penalties shall be sufficiently
                                                                  dissuasive to ensure respect for those measures.
                         Article 12                                                       Article 12
1. Member States shall take the measures necessary to             Unchanged
comply with this Directive not later than 31 December
1990. They shall forthwith inform the Commission
thereof.
2. Member States shall communicate to the                         Unchanged
Commission the provisions of national law which they
adopt in the field governed by this Directive.
                         Article 13                                                       Article 13
This Directive is addressed to the Member States.                 Unchanged
(') OJ No L 66, 16. 3. 1979, p. 21.