The Parliament’s Economic & Monetary Affairs Committee (ECON) has unanimously backed the European Commission’s proposal for criminal sanctions to tackle the abuse and manipulation of financial markets. Under the new rules, Member States will have to make sure that market abuse, including the manipulation of benchmarks, is a criminal offence, and effective sanctions will be put in place everywhere in Europe to punish offenders.

As Vice-President Viviane Reding, the EU’s Justice Commissioner and Michel Barnier, Internal Market and Services Commissioner stated: “We welcome today’s vote in favour of the Commission’s proposal, which confirms that Europe is willing to take all measures necessary to counter insider dealing and market abuse in its financial markets. We would like to thank the ECON Committee and its rapporteur, Arlene McCarthy, for their support and we now look forward to a swift adoption of this important proposal by Parliament and Council. We need to safeguard the integrity of our markets and protect the money of our citizens.”

Investors who trade on insider information and manipulate markets by spreading false or misleading information can currently avoid sanctions by taking advantage of differences in law between the 28 EU Member States. The Commission’s proposal aims to address this problem with a view to reinforcing the integrity of the EU’s financial markets.

Common EU rules

The proposal sets out common EU definitions of market abuse offences such as insider dealing, unlawful disclosure of information and market manipulation. It also foresees a common set of criminal sanctions including fines and imprisonment with a maximum sanction of at least four years for insider dealing/market manipulation and of two years for unlawful disclosure of inside information. Also, companies will be held liable for market abuses.

Under the new rules, Member States need to establish jurisdiction for these offences if they occur in their country or the offender is a national. Finally, they need to ensure that judicial and law enforcement authorities dealing with highly complex cases are well trained.