Archive for the ‘Finland’ Category

1. Introduction 

The EU Market Abuse legislation (directives, regulations and Level 3 guidelines), with the market integrity and investor confidence as its primary objectives, represents a major achievement towards integrated financial markets in EU.

As a matter of domestic legislation and other applicable rules deriving from the Market Abuse legislation, issuers are expected to have adequate preventive measures, systems, procedures and controls in place to ensure discharge of their regulatory obligations and make it as difficult as possible to commit market abuse. The higher the quality of systems and controls implemented by the issuers, the lower the likelihood that their financial instruments become subject to insider dealing or other forms of market abuse.

Given the importance of issuers’ compliance efforts under the Market Abuse regime, it is vital that substantially similar standards and compliance arrangements will evolve to protect investor confidence and market integrity within the EU. A pre-condition for such evolution is an objective understanding about issuers’ anti-market abuse systems, controls and compliance practices as applied on a daily basis.

A survey conducted between February and March 2008 among leading multinational companies listed on the Nordic Market (1)  in cooperation with the City of London, represents an effort to capture such understanding on a regional level.

The survey was conducted by means of confidential questionnaire addressed to general counsels and compliance officers of companies listed on the Nordic Market. The questionnaire focused on selected elements of preventive anti-market abuse systems and controls dealing with:

• identification of inside information within the issuer and its group
• ensuring fair trading by members of the management bodies and employees
• proper handling of inside information and prevention of leaks
• ensuring the quality and reliability of compliance procedures, techniques and record-keeping regarding the above
• internal allocation of responsibilities and tasks regarding the above.

This article summarizes the key-findings of the survey and aims to provide useful comparative information for those in charge of legal and compliance with respect to Market Abuse rules.

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The Financial Supervision Authority (FIN-FSA/RATA) has inspected declarations of insider holdings for the first time since the entry into force of transitional provisions to the Securities Markets Act on 1 January 2006.

– The aim was to pay attention to the maintenance of registers and bring information on all parties required to maintain insider registers up to date, says Jarmo Parkkonen, Deputy Director General of FIN-FSA. Insider registers are important for the preservation of public confidence.

The inspection revealed shortcomings on the part of some persons required to declare insider holdings. These related to delayed filing of basic declarations, declarations of holdings and declarations of changes in holdings. 15 persons subject to the declaration requirement were sanctioned with an administrative fine.

Administrative fine imposed for most serious shortcomings

After a hearing procedure, FIN-FSA imposed an administrative fine on 15 persons subject to the declaration requirement whose basic declaration, declaration of holdings or declaration of changes in holdings to be filed with an insider register had been delayed by over 30 days and who had not voluntarily taken remedial measures immediately after discovery of non-compliance. The administrative fine for a natural person is EUR 250–750.

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The Financial Supervision Authority in Finland has issued a public reprimand to Kari Haavisto, member of the Board of Directors of Aspo Plc, for the use of inside information, under the Securities Markets Act, regarding a securities transaction in Aspo shares.

Mr Haavisto gave a purchase order on 26 June 2007 on Aspo shares after having participated in the Board of Directors meeting in which a decision was made on a share buyback programme for the company’s shares. The order was exercised on behalf of Fundum Oy, a company controlled by his spouse, before Aspo published the matter with a stock market release. Haavisto is the Chairman of the Board of Directors of Fundum. The order was for 5,000 Aspo shares.

In the opinion of the FIN-FSA, Kari Haavisto, as a member of the Board of Directors, was directly involved in making the decision to launch the share buyback, thereby coming into possession of unpublished information categorised as insider information. This information was then abused, in the context of making the purchase order. FIN-FSA is of the view that Kari Haavisto has acted negligently and contrary to the Securities Markets Act and is guilty of using inside information.

The FIN-FSA may issue a natural person a public reprimand if their conduct is in violation of provisions and regulations applicable to him/her personally. The ban on the use of inside information laid down in Chapter 5, Section 2 of the Securities Markets Act is a personally binding provision. An additional requirement for the issuance of public reprimands is that the failure in compliance or the violation has been a deliberate act or an act of negligence.

Public reprimand is one of the administrative sanctions vested with the FIN-FSA in 2003. The public reprimand, above, is the first ever issued on the use of inside information, and is also the first public reprimand issued to a natural person.

The public reprimand is not yet legally valid. Kari Haavisto has the right to appeal to the Market Court on the decision, issued on 18 January 2008 within 30 days of receiving the decision.

Future121, Finnish reseller of CSA Partners’ compliance products, will organize a second morning seminar about practical solutions to comply with Market Abuse Regime targeted to the compliance personnel of Finnish listed companies.The seminar will be held on 30th of October at Spektri Business Park. For Seminar agenda and registration, please look at the seminar website.

The rules introduced by MiFID impose complex requirements on banks’ and investment firms’ organizational governance and internal compliance management.

CSA Partners is delighted to announce the release of the new INSIDeR Professional Edition, a complete internal compliance procedures and records management solution designed to meet the most challenging requirements on organizational governance of MiFID-firms.

INSIDeR Professional Edition is web-based special-purpose compliance management application designed for the implementation of high quality internal control procedures and workflows by MiFID-firms when, among other things, dealing with the following organizational requirements:

• Administration of the list of relevant persons and persons and corporations with close links to relevant persons
• Applying pre-trade clearance regime and keeping records on permissions with regard to personal account dealings (personal transactions) by relevant persons
• Keeping records on personal transactions
• Controlling and reducing the risks of Market Abuse
• Controlling and reducing the risks of conflict of interest
• Ensuring that relevant persons are aware of their obligations
• All the above available on the basis of self-service-model to multiply the efficiency of compliance procedures management across the organization.

INSIDeR Professional will be available on the basis of software-as-a-service model where CSA Partners provides the hosting, support and management of the solution for MiFID firms. That relieves firms from the burden and cost of maintaining and updating in-house systems and IT infrastructure. INSIDeR Professional Edition is available also per in-house installation model, should internal policies rule out software-as-a-service option.

“The Market in Financial Instruments Directive (MiFID) represents the most extensive reform ever seen by the European financial services industry. Key objectives of the MiFID include an increased level of investor protection and the integrity of markets throughout the European Union. These objectives have warranted the introduction of a range of organizational requirements and procedures for MiFID-firms. INSIDeR Professional is our response to help MiFID-firms’ compliance teams to deal with the most challenging of them, says Martin Villig, Managing Director of CSA Partners.”

Future121, a Finnish sales partner of CSA Partners, celebrated it’s 10th Anniversary with a high-profile compliance seminar on 12th of September 2007.Speakers and their presentation topics:

• Flexible E-commerce
  Ian Heggs, Regional Manager – Northern EMEA, Broadvision
• Business Integration and future trends
  Jan Hygstedt, Country Manager – Nordic Region, TIBCO
• IT Benchmarking
  Ole Damsgaard, CEO, IT-Optima A/S
• Helping your competitors – The way to your own success
  Peter Wiklöf, Managing Director, Crosskey
• Issues of Compliance and Risk Management
  Ahto Kink, Senior Legal Counsel, CSA Partners
• The Business Benefit of a Governance, Risk and Compliance
  Luc Brandts, Chief Technology Officer and Founder of BWise

The participants were from current and future customer companies of Future121, including many compliance, financial, legal and IT area specialists.

We wish all the best to Future121 for upcoming successful business years!

The Financial Supervision Authority (RATA) has issued detailed instructions concerning insider trading known as 10 Trading guidelines for insiders.This is in response to the numerous requests RATA has received for more specified instructions on insider trading.

The set of 10 guidelines are operating instructions, which are not binding in nature. However they will improve legal certainty in the complex area of employee and management dealings in company shares by helping insiders to avoid unnecessary suspicions of abuse of insider information in connection with their own transactions.

Among other things RATA recommends making use of internal clearance procedure, whereby insiders should consult the person responsible for insider trading in the company if there are any known insider barriers to the intended transaction.

The official press release is available at: http://www.fin-fsa.fi/Eng/FIN-FSA_News/Press_releases/02_2007.htm

Guidelines are available at: http://www.fin-fsa.fi/Eng/Regulation/Instructions_concerning_insiders/etusivu.htm