The European Parliament recently approved the implementation of tough EU-wide criminal penalties for market abuse. The votes reached by the plenary session of the Parliament clearly showed its intention to “restore confidence in EU’s financial market and improve investor protection” by stipulating severe criminal penalties (with a minimum jail sentence of 2 or 4 years depending on the actions carried out) for serious offences such as insider dealing and market manipulation.
The draft rules approved are also a big step forward in harmonizing the application of this sort of penalties EU-wide and the definition of offences to be punished by law. So far, the existing differences regarding the aforesaid application and definition among member states have enabled cross-border market abuse and have allowed financial market manipulators to operate in the country with less tough penalties. This situation is expected to be changed through the implementation of the new regulation.
Once the rules agreed by the European Parliament are formally approved by the Council of Ministers, member states will have 2 years to put them into effect.
After the European Parliament reached its decision, Civil Liberties Committee rapporteur Emine Bozkurt showed her satisfaction stating the following: “Criminals who get rich by manipulating markets and insider dealing should not get away with just an administrative penalty. I am proud that my proposal of at least four years’ imprisonment for these offences made it into the final text. Ensuring that justice is seen to be done will help to rebuild our citizens’ trust in financial markets […]”.