Directive 2014/57/EU on criminal sanctions for market abuse
Produced in partnership with Alison Geary of Wilmer Hale
Directive 2014/57/EU on criminal sanctions for market abuse

The following Financial Services guidance note Produced in partnership with Alison Geary of Wilmer Hale provides comprehensive and up to date legal information covering:

  • Directive 2014/57/EU on criminal sanctions for market abuse
  • Background
  • Focus
  • Overview
  • Inchoate offences are also punishable as criminal offences
  • Key provisions
  • Insider dealing or recommending or inducing another person to engage in insider dealing
  • What is inside information?
  • When will a person be regarded as possessing inside information?
  • Recommending or inducing another person to engage in insider dealing
  • more

Background

The Market Abuse Directive (2003/6/EC, commonly referred to as 'MAD') was adopted in 2003 and established a legal framework throughout the European Union (EU) to protect market integrity against instances of insider dealing and market manipulation.

Following the widespread damage caused by the financial crisis however, a review into the effectiveness of MAD was undertaken which led to the European Commission (Commission) proposing that MAD be repealed and replaced.

As a result, on 12 June 2014 the text of two new legislative tools was published in the Official Journal of the European Union:

  1. Regulation (EU) No 596/2014 on market abuse (Market Abuse Regulation), and

  2. Directive 2014/57/EU on criminal sanctions for market abuse (variously referred to as CSMAD or the Directive)

Taken together, the Market Abuse Regulation and CSMAD replaced MAD and introduced a new market abuse regime across the EU that encompasses a wider range of markets, products and behaviour than was previously provided for.

MAR and CSMAD became effective on 3 July 2016.

Focus

The principal focus of this Practice Note is on the criminal sanctions introduced under the Directive, referencing the Market Abuse Regulation where necessary.

This Practice Note provides:

  1. a high-level overview of the Directive

  2. a more detailed consideration of each of the Directive’s key provisions

  3. the background to, and implications of, the UK’s decision to opt out