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The Directive will oblige Member States to provide in their national legislation for criminal penalties in respect of insider dealing, market manipulation and unlawful disclosure of inside information. It will require member states to ensure that inciting as well as aiding and abetting criminal offences is also punishable
This so-called market abuse directive (MAD) will be applied taking into account the legal framework established by a revised market abuse regulation (MAR). It will amend and replace directive 2003/6/EC.
A well-functioning legal framework requires effective enforcement. To ensure that sanctions are effective and dissuasive, the directive establishes minimum levels for the maximum term of imprisonment.
Offences related to insider dealing and to recommending or inducing another person to engage in insider dealing and market manipulation will be punishable by a maximum term of at least four years. Offences related to unlawful disclosure of inside information will be punishable by a maximum term of at least two years.
Today's agreement will enable both regulation and directive to be adopted at first reading. The regulation will first be subject to technical alignment in the light of revised rules relating to markets in financial instruments, for which negotiations with the Parliament are still ongoing.
The importance of market integrity was highlighted by the economic and financial crisis of 2008-09, and the G20 has agreed to strengthen financial supervision and regulation and to build a framework of internationally agreed high standards.
VP Reding
"Market abuse is a major problem for confidence in our financial system and we need to tackle it head-on. This means closing regulatory loopholes which can be exploited by manipulators in the financial market. Criminal law is a powerful deterrent, and, following today's breakthrough, those guilty of market abuse will face the full force of criminal law wherever they are in our Union", said Vice-President Viviane Reding, the EU's Justice Commissioner. "I hope we can now swiftly dot the 'i's and cross the 't's so this proposal can quickly become law. The EU is applying a zero-tolerance policy when it comes to market abuse and rate rigging. We need to protect the integrity of our markets and we need to protect the money of our citizens."
Commissioner Barnier
Internal Market and Services Commissioner Michel Barnier said: "This is great news for investors and an unwelcome Christmas present for white collar criminals. Offenders found guilty of market abuse will finally face jail across the European Union. Together with our Market Abuse Regulation, the EU has significantly strengthened the powers of Member States to detect and punish severely insider dealing and market manipulation. In particular, those who manipulate benchmarks such as Euribor will in future face large fines or jail. I pay tribute to the European Parliament for improving our proposal by fixing defined jail terms. I would also like to thank the European Parliament, especially the rapporteur, Arlene McCarthy, as well as the Lithuanian Presidency for their excellent work in arriving at this agreement."
Perm Reps chair
“It is a very important legal instrument of the European Union for the protection of market integrity. It will safeguard the smooth functioning of financial markets and ensure public confidence in securities, adding to economic growth and prosperity in Europe. The Lithuanian Presidency has also invested much effort in the related MiFID and MiFIR dossiers and nearly brought them to conclusion. We are sure that the incoming Greek Presidency will be able to finalize the work very soon for the entire package to enter into force at the same time", said ambassador Raimundas Karoblis, chair of the Permanent Representatives Committee.
The proposal for Market Abuse Directive was presented by the Commission on October 21, 2011 and the EU Justice Ministers reached an agreement on the proposal on December 7, 2012. After an initial political meeting on MAD and MAR in January this year, the MAD dossier was in a deadlock till the progress on MAR was made. As an agreement on MAR was reached between the Council and the European Parliament in June 2013, the Lithuanian Presidency has engaged in intensive negotiations with the European Parliament on the text of the Market Abuse Directive.
Lithuanian Presidency press release