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CESR publishes today a Report on Administrative Measures and Sanctions as well as on Criminal Sanctions following the entry into force of the Market Abuse Directive (MAD 2003/6/EC). The purpose of this report is to inform the EU Institutions and market participants about the different legal frameworks to apply sanctions and administrative measures across the EU.
The “Report on Administrative Measures and Sanctions available in Member States under the MAD” consists of a compilation of the responses provided by all the CESR’s Members on the legal tools available nationally, to enforce infringements of the requirements set out in the Directive.
The MAD required Member States
‘to ensure, in conformity with their national law, that the appropriate administrative measures can be taken or administrative sanctions be imposed against the persons responsible where the provisions adopted in the implementation of this Directive have not been complied with. Member States shall ensure that these measures are effective, proportionate and dissuasive’ (Article 14 para.1).According to the MAD provisions it is left to the national discretion of Member States to decide on the amount of pecuniary fines and the types of administrative measures applicable on Market Abuse cases. Furthermore, the Member States may also introduce criminal sanctions on Market Abuse cases.
The report published today, is therefore of a fact-finding nature and sets out the situation in each Member State, as of 17 October 2007. The accuracy of the responses is the sole responsibility of each CESR Member.
The Report does not seek to analyse differences or to draw any conclusions on the impact of differences, nevertheless, a broad range of sanctions within Europe can be identified. These include the ability to administer fines; force imprisonment; withdraw licenses; disgorge profits; require settlements amongst others. CESR notes that the differences that exist are largely due to the fact that Members States’ legal systems differ, and that the division of responsibilities between competent authorities in each Member State, in relation to the investigation of cases and subsequent enforcement of national law, may also vary. Due to the size of the document, CESR would like to do further work to summarise the reports content in an overview format and this will be published subsequently on CESR’s website.
Today’s report should also be seen in the context of CESR’s efforts to monitor the extent of equivalence of supervisory powers across Europe, under the Market Abuse Directive. On 21 June 2007, CESR published a correspondence table on the Market Abuse Directive (Ref. CESR/07-382). This illustrated through a tick box approach what supervisory powers CESR Members hold and how they are exercised. Furthermore in a report which includes an executive summary, CESR described its members’ supervisory powers under the Market Abuse Directive and the relevant implementing measures (Ref.CESR/07-380). The report not only assessed the attribution of the powers to CESR Members, but also considered the ability to issue practical rules; the general powers provided to CESR Members to apply the Directives; the co-operation powers of each Member and an assessment of supervisory practices. An overview report (Ref. CESR /07-334) which included a high level analysis of the findings in relation to both MAD and the Prospectus Directive, was also submitted to the FSC, alongside the detailed findings on the MAD itself.
Background on the development of the Report:
The development of the Report published today, followed what was initially an internal mapping exercise undertaken in 2005 by CESR Members through its operational working group for co-operation and enforcement (CESR-Pol). The internal mapping exercise sought to identify powers and sanctions in the area of market abuse to inform and assist the development of supervisors’ understanding of each others systems.
As a result of this initial work, CESR recommended that the European Commission draw up a list of administrative measures and sanctions available to Member States under the MAD to achieve more transparency. In March 2007, the European Commission requested CESR to assist in setting up, for information purposes, a list of administrative sanctions and measures as well as of criminal sanctions under the MAD, in order to facilitate effective implementation and application of the Directive. A copy of the Commission’s letter requesting CESR to undertake this fact-finding exercise is included in the report (p 4-5).
