Archive for the ‘MiFID’ Category

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.

NYC judge sent Wall Street hedge fund manager to jail / Siim

23/05/2010. Tags: , , , , , , , , | This post has no Comments

MSNBC wrote: A former top executive at a $1 billion hedge fund investment firm was sentenced to more than two years in prison Friday in the first sentencing to result from what prosecutors have called the largest hedge fund insider trading case in history.

Mark Kurland, 61, of Mount Kisco, N.Y., was sentenced Friday to two years and three months in prison and ordered to forfeit the $900,000 he made through illegal trades by a judge who blamed the attitudes of people like Kurland on the country’s financial collapse two years ago.

U.S. District Judge Victor Marrero said Kurland, a co-founder of New Castle Partners hedge fund in Manhattan, “frankly should have known better” than to join an inside trading scheme that led to the arrests of top executives including one-time billionaire Raj Rajaratnam.

“He had a choice as a leader of the financial industry. He could have led by example. Instead, he chose to follow. He became a joiner, surrendering to the spree of the financial market’s virtual mob mentality that nearly brought down this country’s financial industry in the quest for ever bigger and faster gains,” Marrero said.

Kurland, who had pleaded guilty to conspiracy to commit securities fraud and securities fraud, was among 11 people who have pleaded guilty in the case. Many of the others had agreed to cooperate with the government, a step which delays their sentencing.

Rajaratnam, the portfolio manager for the Galleon Group hedge fund, has pleaded not guilty and disputed government claims that he pocketed as much as $50 million through a network of cheating executives at financial firms and companies privy to inside information.

The judge criticized pleas for leniency on Kurland’s behalf on the grounds that he had a minimal role, that he did not benefit much financially, that others were more at fault and that there was no real harm to the markets.

Read the whole story >

Swedbank employee suspected of insider trading / Mait

28/11/2009. Tags: , , , , , | This post has no Comments

BalticBusinessNews writes that Swedbank employee suspected of insider trading. Anton Uustalu, 27-year-old former employee of client relations department of Swedbank, is one of the suspects in insider trading scheme with Eesti Telekom stock.

Priit Perens, general manager of Swedbank Eesti, said that he could not comment the case and suggested that Äripäev asked the prosecution for comment. “Uustalu left on the mutual agreement,” was all that Perens said, without elaborating why Uustalu’s employment contract was terminated.

Ex-SEB Enskilda Analyst Charged in Insider Case / Martin

07/11/2009. Tags: , , , , , , , , , , , , | This post has no Comments

New York Times wrote that Estonian prosecutors charged Dmitri Vassiljev, a former analyst at SEB Enskilda, with using inside information to trade shares and options of the Baltic telecommunications companiess Eesti Telekom and TEO.

Mr. Vassiljev used information on TeliaSonera’s offer to buy out minority shareholders in the two companies to which he had access to before it was made public, the Tallinn-based state prosecutor’s office and Financial Supervisory Authority said Thursday in separate statements. Eesti Telekom rose 23 percent and TEO jumped 30 percent after the offer was announced
August 24th.

Ahto Kink
[18.01.2010 19:16:49 | Edited 19:17:20] Ahto Kink: This case highlights the importance of proper systems and controls that investment banks and advisors should have in place in order safeguard inside information from their customers.
In particular:
- every member of the staff should be exposed to the information only on a need to know basis;
- flow of inside information should be rigorously controlled and list of insiders, with exact date and time when information was received, maintained;
- each employee who has obtained the access to the information, should be alerted about the fact that the information received, is inside information;
- adequate personal account dealing controls (e.g. list of restricted instruments) should prohibit members of the staff from making transactions (directly or via related persons) with securities issued by the customer.


Comments from CSA Partners:

This case highlights the importance of proper systems and controls that investment banks and advisors should have in place in order safeguard inside information from their customers.

In particular:

  • every member of the staff should be exposed to the information only on a need to know basis;
  • flow of inside information should be rigorously controlled and list of insiders, with exact date and time when information was received, maintained;
  • each employee who has obtained the access to the information, should be alerted about the fact that the information received, is inside information;
  • adequate personal account dealing controls (e.g. list of restricted instruments) should prohibit members of the staff from making transactions (directly or via related persons) with securities issued by the customer.

CESR Members Enhance Supervisory Co-Operation For Branch Supervision / Ahto

03/09/2008. | This post has no Comments

CESR reports today on the progress made under the protocol for the supervision of branches in the context of the Markets in Financial Instruments Directive (MiFID).

In the months since the implementation of MiFID on 1 November 2007, 16 agreements for cooperation on the supervision of branches have been concluded between CESR Members. This progress is an important step in order to achieve effective and transparent supervision and to enhance co-operation amongst supervisors.

Further information can be found in the CESR press release published today.

China considers expansion of insider trading ban / Mait

24/08/2008. | This post has no Comments

XinHuaNet writes that employees of financial institutes who take advantage of non-public information for personal gains in trading will face criminal prosecution, according to the draft amendment to the Criminal Law submitted to China’s top legislature Monday. Employees of fund management companies, securities firms, commercial banks and other financial establishments could be jailed for up to 10 years and fined up to five times of their illegal gains, if they seek, or advise others, to profit from non-public information, the draft says.

The draft amendment, submitted to the Standing Committee of the National People’s Congress (NPC) for its first hearing, marks the country’s latest initiative to crack down on insider trading.

The existing Criminal Law bans individuals with access to classified information from trading in related stocks and securities. The prohibition did not include other non-public information such as the fund flow information of the company’s trusted funds

    The amendment came after an insider trading case involving TangJian, a fund manager at the Shanghai-based China International Fund Management Co., in which JP Morgan Asset Management (UK) Limited holds a 49-percent stake.

(more…)

FSA rules banks must record and store client calls / Mait

05/03/2008. Tags: , , , , | This post has no Comments

FT.com writes that the City regulator has told banks and other financial institutions that they will have to tape telephone conversations and keep the files for six months if client orders are involved.
The Financial Services Authority said yesterday that from March next year all calls relating to client orders for stocks, bonds, commodities and derivatives will have to be held for at least half a year, and longer if the regulator specifically demanded it.

The decision is related to the FSA’s efforts to combat market abuse, specifically insider dealing, a crime it
claims is linked to up to a quarter of all takeover deals, but which it has had little success in tackling
because of problems in gathering sufficiently strong evidence.

“Telephone taping” covers electronic communications, from e-mail to instant messaging, as well as phone
calls. Many businesses currently record calls involving clients with the aim of using them to help settle
disputes. Mobile calls are exempted for now, although this will be reviewed in 18 months’ time. Technology to eliably record and store the calls is still relatively untested.

The six-month requirement is a sharp climbdown from the FSA’s original proposal of three years. This
was watered down after extensive consultation with companies, which warned the costs would be far
higher than the initial £4.5m set-up fee and £4m yearly costs the FSA envisaged. Yesterday its proposal estimated that the six-month storage demand would cost as much as £14m to set up and between £6m and £11m a year after that.

John Ewan, director at the British Bankers Association, said: “We understand that the FSA needs time to ut together a case and [assess] how useful the recordings might be, but they often know far sooner
which records they could be interested in – and we’re happy to keep those.”

Banks were also believed to have been worried about a lack of clarity about their exact obligations. Some
were concerned they risked censure from the regulator if they failed to have adequate back-up and could
not produce a specified recording.

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