CSA Partners: Compliance Blog

Cyprint Plc fined 10.000 for insider trading / Martin

14/12/2018. | This post has no Comments

The Cyprus Securities and Exchange Commission (CySEC) has just announced that it has fined the company Cyprint Plc and its former Director due to Insider Dealing.

Cyprint Plc has to pay a total administrative fine of €10.000 and Mr Christakis Christodoulou, Executive Director at the time, €5.000.

Read full statement >

Record number of insider trading crimes hits Sweden in 2016 / Martin

02/02/2017. | This post has no Comments

Bloomberg reports: One of the most honest places on the planet is in the grip of a financial crime wave.

In the last month alone, Sweden has opened probes into possible wrongdoing by a billionaire, a former finance minister, the national property board, a former tech CEO and one of his company’s directors. The alleged crimes range from insider trading to bribery.

Transparency International last week cited “leading people” losing their “ethical compass” in downgrading Sweden one level in the watchdog’s annual ranking of the least-corrupt countries — to No. 4 after Denmark, New Zealand and Finland. The Reputation Institute, a Chicago-based consulting firm, hailed Sweden as the world’s “most reputable” country just last summer.

The flurry of investigations “is a wake-up call” for a society that has gotten used to thinking it’s squeaky clean, according to Madeleine Leijonhufvud, a criminal law professor at Stockholm University and former chairwoman of the Swedish Anti-Corruption Institute. “We’re starting to realize that not everything is OK.”

Record High

The number of insider crimes reported in this country of 10 million people soared 53 percent last year to a record 338, while the number of bribery cases jumped 47 percent to 246, a seven-year high, government data show.

Authorities are cracking down on economic crime, enacting a new law on market abuse, criminalizing more “behaviors” and introducing harsher penalties. Gunilla Sandblom, the Economic Crime Authority’s chief prosecutor, said the surge in insider trading is particularly troubling because it can erode confidence in the country’s capital markets and deter investment.

“The increase is serious,” Sandblom said by phone, attributing the spike in part to better oversight by regulators and an uptick in the number of listings by smaller companies inexperienced in vetting their own procedures. “During raids, we’ve seen documents containing insider information lying around the photocopier, allowing anyone working there to see and act upon it,” she said.

Read full story from Bloomberg >

Insider Trading Arrests in Sweden – Lars Soderfjell & Johan Carlstrom from Fingerprint Cards AB / Martin

24/01/2017. | This post has no Comments

Bloomberg: Fingerprint Cards AB – a technology company that as recently as 2015 delivered investors a 1,600 percent stock-price gain now finds its name at the center of a criminal investigation in Scandinavia.

Sweden’s crime authority arrested current and former officials at Fingerprint Cards AB on suspicion of aggravated insider trading, sending shares of the maker of biometric sensors for smartphones to a 15-month low on Monday.

“Overall, there have been far too many twists and turns and strange events connected to Fingerprint,” Joacim Olsson, chief executive at the Swedish Shareholders’ Association, said by phone. “At some level, this indicates that the company hasn’t matured to the same degree that it has grown.”

Board member Lars Soderfjell and former Chief Executive Officer Johan Carlstrom were taken into custody, the Swedish Economic Crime Authority said on Monday. Authorities became suspicious after registering “large-scale sales” in Fingerprint shares before a Dec. 8 profit warning that subsequently pushed the stock down as much as 18 percent.

The investigation marks a setback in Fingerprint’s attempts to distance itself from Carlstrom, who’s also been charged separately for insider trading while he was still CEO. Meanwhile, the company is struggling to stay competitive as rivals offer cheaper alternatives to the technology that brought Fingerprint to fame: sensors used by the likes of LG Electronics Inc. and Lenovo Group Ltd.

The company says the arrests are linked to the individuals in question only, and don’t affect its operations.

Read full story from Bloomberg

When the logbook goes beyond Facebook / Martin

03/07/2016. | This post has no Comments

EU legislators have worked hard for several years to “reduce” unnecessary administrative burdens associated with insider lists. And here is what some may call a “remarkable outcome” coming into effect on July 3, 2016 under the new Market Abuse regime:

  • Extension of the obligation to maintain insider lists from the regulated market issuers to issuers whose instruments are traded on MTFs and OTFs;
  • Extensive list of personal data going beyond what is stored in HR systems or data subject’s Facebook account;
  • Great deal of exposure for every entity responsible for maintaining the insider lists to highly demanding requirements of the Regulation (EU) 2016/679 (General Data Protection Regulation, effective May 2018) and sanctioning regime thereunder with administrative fines in the range of EUR 20 000 000;
  • EUR 1 000 000 as administrative pecuniary sanction for infringements related to insider lists by legal persons required to maintain them (extends to issuers as well as any legal person acting on their behalf or on their account);
  • EUR 500 000 as maximum administrative pecuniary sanction for infringements related to insider lists by natural persons: employee(s) and senior officer(s) responsible for this field of compliance are primarily exposed here.

Thus to sleep well after July 3, you have to be sure among others that:

  • Your insider lists are drawn up and maintained in full compliance with Article 18 of the Market Abuse Regulation (EU) 596/2014 and implementing regulations thereof;
  • You draw up and maintain deal-specific or event based sections of the insider list in compliance with Annex I Template 1 of the Commission Implementing Regulation (EU) 2016/347;
  • You draw up and maintain permanent insiders section of the insider list in compliance with Annex I Template 2 of the Commission Implementing Regulation (EU) 2016/347
  • That any person on the insider list acknowledges in writing the legal and regulatory duties entailed and is aware of the sanctions applicable to insider dealing and unlawful disclosure of inside information in compliance with Article 18 (2) of the Market Abuse Regulation (EU) 596/2014;
  • That you draw up and properly maintain a list of all persons discharging managerial responsibilities and persons closely associated with them as required by Article 19(5) of the Market Abuse Regulation (EU) 596/2014;
  • That persons discharging managerial responsibilities and persons closely associated with them are properly notified about their obligations under Article 19 of the Market Abuse Regulation (EU) 596/2014, i.e. obligation to notify the issuer and competent authority about transactions made with shares or debt instruments of that issuer or to derivatives or other financial instruments linked thereto;
  • As an issuer you ensure that transactions notified by persons discharging managerial responsibilities and persons closely associated with them are made public promptly and no later than three business days after the transaction;
  • That persons discharging managerial responsibilities within an issuer do not conduct transactions during a closed period of 30 calendar days before the announcement of an interim financial report or a year-end report as required by Article 19 (11) of the Market Abuse Regulation (EU) 596/2014;
  • You have a solution in place to simplify and support transaction notification by persons discharging managerial responsibilities, persons closely associated with them as well as for other stakeholders that are bound by notification under the personal account dealing rules, policies and procedures;
  • You have a clearance procedure to manage exceptions to the trading restriction provided under Article 19 (11) of the Market Abuse Regulation (EU) 596/2014
  • You have proper procedures and records to manage delay of inside information pursuant to Article 17 (4)-(6) of the Market Abuse Regulation (EU) 596/2014.

INSIDeR has supported EU issuers with the above compliance issues for more than 10 years.

Improved and adapted, it continues to be the best solution available to handle any of the above requirements in accordance with the new Market Abuse regime.

Swiss trader to pay $2.8m to settle insider trading charges / Martin

17/06/2015. | This post has no Comments

The Securities and Exchange Commission today announced that a Basel based Swiss trader has agreed to pay more than $2.8m to settle charges that he traded on nonpublic information ahead of a Florida-based biometrics company’s acquisition by Apple Inc.

An SEC investigation unearthed evidence that Helmut Anscheringer purchased stock and call options in AuthenTec Inc (which provides fingerprint sensors and software for use in electronic devices) having learnt from a friend related to an AuthenTec executive that Apple proposed to buy the company.

The call options accounted for nearly all of the series volume on the days he purchased them. Just days later, AuthenTec publicly announced that it had agreed to become a wholly-owned subsidiary of Apple for $355m in cash. The positive news led to the stock price closing approximately 60% higher than the previous day. Through his unlawful trading, Anscheringer garnered more than $1.8m in illicit profits.

Read full story >

Accountant and son charged in $1.1M Insider Trading Scheme / Siim

15/05/2015. | This post has no Comments

The Securities and Exchange Commission charged a CPA and his son in New York on Thursday, accusing them of conducting an insider trading scheme involving tips on nonpublic information that they sent in coded email messages disguised as discussions about golf.

The SEC alleges that Sean R. Stewart, who is currently a managing director at a prominent investment bank, routinely tipped his father Robert K. Stewart with confidential information about future mergers and acquisitions involving clients of two investment banks where he has worked during the past few years.

The elder Stewart, who is a CPA as well as the CFO of a technology company, allegedly cashed in on the tips by placing and directing highly profitable securities trades ahead of at least a half-dozen merger and acquisition announcements.  The scheme generated approximately $1.1 million in illicit proceeds in a four-year period.

In a parallel action, the U.S. Attorney’s Office for the Southern District of New York today announced criminal charges against the Stewarts.

According to the SEC’s complaint filed in U.S. District Court for the Southern District of New York, Robert Stewart recruited a trading partner to help him hide his illegal trading and the connection to his son as the source of the nonpublic information about investment bank clients.  Trades were conducted in the partner’s account, and the illicit profits were shared in the form small cash payments to Robert Stewart to avoid creating a clear paper trail of the kickbacks.  They also spread trades over numerous stock options series in an attempt to avoid raising red flags with regulators.

“Serial insider traders assume a huge risk that we will detect their pattern of trading and connect them to their source of confidential information,” said Daniel M. Hawke, chief of the SEC Division of Enforcement’s Market Abuse Unit.  “We have integrated new technological tools to quickly and easily identify relationships among traders and spot suspicious trading across multiple securities.”

According to the SEC’s complaint, there were additional ways the elder Stewart and his fellow trader attempted to conceal the scheme and evade detection when sharing nonpublic information obtained from Sean Stewart about investment bank clients.

They primarily met in-person or used coded e-mail messages to discuss the scheme and trading plans.  Among examples of e-mail text using golf terminology were “saw local story about high cost of golf reservations since a foreign company purchased all- even more expensive than imagined” and “might have an opportunity to play golf- but would need to book the reservation as soon as the office opens Tuesday morning.”

The SEC’s complaint charges Robert and Sean Stewart with violations of the antifraud provisions of the federal securities laws.

Robert Stewart was arrested on conspiracy and insider trading charges this morning at his home in North Merrick, Long Island. Sean Stewart surrendered to the FBI on the same charges in Middleton, Wis., and is expected to appear in Manhattan federal court on Monday.

Read the full story >

FCA fines Kenneth Carver 35,000 GBP for part in Logica insider trading scheme / Mait

31/03/2015. | This post has no Comments

Former accountant Ken­neth Carver was yesterday fined £35,212 by the Finan­cial Conduct Authority (FCA) for his part in the Logica insider trading scheme.

Carver is a family friend of recently imprisoned Ryan Willmott who pleaded guilty to three counts of insider trading during his time as a financial planning and group reporting manager for IT management firm Logica.

Willmott dealt on information he obtained regarding the takeover of Logica by CGI Group in May 2012 and has been jailed for 10 months. Carver bought 62,000 shares in Logica during the scheme and made a profit of £24,206.70 from selling the shares after they saw a 59.8 per cent rise from the takeover announcement.

FCA acting director of enforcement and market oversight Georgina Philip­pou said: “Carver… used his own funds to place a trade on Willmott’s behalf and knew that Willmott had a financial incentive to persuade him to trade. Market abuse is a ser­ious offence and today’s fine reflects the fact that we will not hesitate in taking action against individuals who act on inside information.”

However, since Carver co-oper­ated with the FCA and settled at an early stage of the probe, his fine was reduced from the £122,212 it would otherwise have been.

Source: City A.M.

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