Insider Trading:The Laws of Europe, the United States and Japan

Regulation of insider trading has changed dramatically in the past few years. In reaction to highly publicized insider trading scandals and the internationalization of securities markets, all European countries have recently either strengthened their existing rules (France and the United Kingdom) or implemented new rules (Denmark, Greece, The Netherlands, Belgium, Ireland, Spain, Portugal, Luxembourg, and Italy). The United States continues to refine its insider trading regulations, and Japan has recently enacted legislation in this field. As a result of the increasingly international nature of insider trading, supervisory authorities throughout the world now closely coordinate their efforts. Drawing from the experience of law professors, governmental officials and practising lawyers, this book explores the regulations of eighteen countries in Europe, the United States and Japan, as well as the EC Directive Coordinating Regulations on Insider Dealing, and the Council of Europe's Convention on Insider Trading. This book is an indispensable tool for practising lawyers, legislators, academics, and international business and finance professionals. Combining legal doctrine and practical information, it analyzes, for each legal system, how insider trading is defined and controlled. Further, it addresses other stock-related infractions and international law issues such as jurisdiction and international cooperation. Cover Half Title Page Title Page Copyright Page Introduction Table of Contents Part I EUROPE International Sources Chapter 1 The EC Directive of 1989 I. OVERVIEW II. DEFINITION OF INSIDER TRADING 1. Inside Information A. The Nature of Inside Information B. The Purpose of the Information 2. Categories of Insiders A. Primary Insiders B. Secondary Insiders 3. Presumption of Knowledge 4. Prohibited Activities A. Prohibited Activities for Both Primary and Secondary Insiders B. Prohibited Activities for Primary Insiders Only III. CONTROL OF INSIDER TRADING 1. Supervisory Authorities 2. Preventive Measures 3. Sanctions IV. OTHER STOCK-RELATED INFRACTIONS V. INTERNATIONAL LAW 1. Jurisdiction 2. Applicable Law 3. International Cooperation Chapter 2 The Council of Europe's Convention of 1989 I. OVERVIEW II. THE DEFINITION OF INSIDER TRADING III. CONTROL OF INSIDER TRADING IV. OTHER STOCK-RELATED INFRACTIONS V. INTERNATIONAL LAW VI. THE EC DIRECTIVE VII. CONCLUSIONS National Legislation EC Member States Chapter 3 Belgium I. OVERVIEW II. DEFINITION OF INSIDER TRADING 1. Inside Information 2. Categories of Insiders 3. Presumption of Knowledge 4. Prohibited Activities III. CONTROL OF INSIDER TRADING 1. Supervisory Authorities 2. Preventive Measures 3. Sanctions IV. OTHER STOCK-RELATED INFRACTIONS V. INTERNATIONAL LAW 1. Jurisdiction 2. International Cooperation VI. THE EC DIRECTIVE Chapter 4 DENMARK I. OVERVIEW II. DEFINITION OF INSIDER TRADING 1. Inside Information 2. Categories of Insiders 3. Presumption of Knowledge 4. Prohibited Activities III. CONTROL OF INSIDER TRADING 1. Supervisory Authorities 2. Preventive Measures 3. Sanctions IV. OTHER STOCK-RELATED INFRACTIONS v. INTERNATIONAL LAW 1. Jurisdiction 2. International Cooperation VI. THE EC DIRECTIVE Chapter 5 France I. OVERVIEW II. DEFINITION OF INSIDER TRADING 1. Inside Information A. Nature of Inside Information B. Subject Matter of Inside Information 2. Categories of Insiders A. Primary Insiders B. Secondary Insiders 3. Presumption of Knowledge 4. Prohibited Activities A. The Use of Inside Infonnation B. The Disclosure of Inside Information III. CONTROL OF INSIDER TRADING 1. Supervisory Authorities 2. Preventive Measures 3. Sanctions A. Criminal Penalties B. Administrative Sanctions IV. OTHER STOCK RELATED INFRACTIONS v. INTERNATIONAL LAW 1. Jurisdiction 2. International Cooperation VI. THE EC DIRECTIVE Chapter 6 Germany I. OVERVIEW II. APPLICABILITY OF THE GUIDELINES III. THE PROVISIONS OF THE GUIDELINES A. The Prohibition Against Insider Trading B. Categories of Insiders C. Insider Paper D. Inside Information E. Investigation of Possible Violations of the Guidelines F. Sanctions IV. THE CODE OF PROCEDURE A. Composition of the Review Panel B. Jurisdiction of the Review Panel C. Initiation of Proceedings D. Procedures for Investigations E. Determinations by the Review Panel V. REVIEW PANEL DECISIONS VI. ACCEPTANCE AND CRITICISM VII. STATUTORY APPROACHES TO INSIDER TRADING A. Actions Under the Stock Corporation Law (AktG) B. Actions Under the Law against Unfair Competition C. Other Possible Actions VIII. THE EC DIRECTIVE ON INSIDER DEALING Chapter 7 GREECE I. OVERVIEW II. DEFINITION OF INSIDER TRADING 1. Inside Information 2. Categories of Insiders A. Primary Insiders B. Secondary Insiders 3. Presumption of Knowledge 4. Prohibited Activities III. CONTROL OF INSIDER TRADING 1. Supervisory Authorities 2. Preventive Measures 3. Sanctions IV. OTHER STOCK-RELATED INFRACTIONS v. INTERNATIONAL LAW 1. Jurisdiction 2. International Cooperation VI. THE EC DIRECTIVE Chapter 8 IRELAND I. OVERVIEW II. DEFINITION OF INSIDER TRADING 1. Insider Information 2. Categories of Insiders 3. Presumption of Knowledge 4. Prohibited Activities III. CONTROL OF INSIDER TRADING 1. Supervisory Authorities 2. Sanctions IV. OTHER STOCK-RELATED INFRACTIONS V. INTERNATIONAL LAW 1. Jurisdiction 2. International Cooperation VI. THE EC DIRECTIVE Chapter 9 Italy I. OVERVIEW II. DEFINITION OF INSIDER TRADING 1. Inside Information A. General B. Definition of Inside Information 2. Categories ofInsider A. General B. The Extension of the Prohibitions to Tippees C. Prohibition regarding Ministers and Under-Secretaries of State 3. Presumption of Knowledge 4. Prohibited Activities III. CONTROL OF INSIDER TRADING 1. Supervisory Authorities 2. Preventive Measures 3. Sanctions IV. OTHER STOCK-RELATED INFRACTIONS v. INTERNATIONAL LAW 1. Jurisdiction 2. International Cooperation VI. THE EC DIRECTIVE Chapter 10 Luxembourg I. OVERVIEW II. DEFINITION OF INSIDE INFORMATION 1. Inside Information 2. Categories of Insiders A. Primary Insiders B. Secondary Insiders 3. Presumption of Knowledge 4. Prohibited Activities III. CONTROL OF INSIDER TRADING 1. Supervisory Authorities 2. Sanctions IV. OTHER STOCK-RELATED INFRACTIONS V. INTERNATIONAL LAW 1. Jurisdiction 2. International Cooperation VI. THE EC DIRECTIVE Chapter 11 The Netherlands I. OVERVIEW II. DEFINITION OF INSIDER TRADING 1. Inside Information 2. Categories of Insiders III. CONTROL OF INSIDER TRADING 1. Supervisory Authorities 2. Preventive Measures 3. Sanctions IV. INTERNATIONAL LAW 1. Jurisdiction 2. International Cooperation v. THE EC DIRECTIVE 66 VI. CONCLUSION Chapter 12 Portugal I. OVERVIEW II. DEFINITION OF INSIDER TRADING 1. Inside Information 2. Categories of Insiders 3. Presumption of Knowledge 4. Prohibited Activities III. CONTROL OF INSIDER TRADING 1. Supervisory Authorities 2. Preventive Measures 3. Sanctions IV. OTHER STOCK-RELATED INFRACTIONS V. INTERNATIONAL LAW 1. Jurisdiction 2. International Cooperation VI. THE EC DIRECTIVE Chapter 13 Spain I. OVERVIEW II. DEFINITION OF INSIDER TRADING 1. Inside Information 2. Categories of Insiders 3. Presumption of Knowledge 4. Prohibited Activities III. CONTROL OF INSIDER TRADING 1. Supervisory Authorities 2. Preventive Measures 3. Sanctions IV. OTHER STOCK-RELATED INFRACTIONS V. INTERNATIONAL LAW 1. Jurisdiction 2. International Cooperation VI. THE EC DIRECTIVE VB. CONCLUSION Chapter 14 United Kingdom I. OVERVIEW1 II. DEFINITION OF INSIDER TRADING 1. Inside Information A. The Basic Definition B. Non-Statutory Definitions of Inside Information C. Breach of Confidence 2. Categories of Insiders A. Primary Insiders B. Secondary Insiders ('Tippees') 3. Presumption of Knowledge 4. Prohibited Activities A. IDA 1985: Criminal Offenses B. Dealing in Securities55 C. Counselling and Procuring63 D. Communicating Information66 E. Defenses F. The Companies Act 1985 G. Extra Statutory Restrictions III. CONTROL OF INSIDER TRADING 1. Supervisory Authorities A. Powers o/the Regulators B. Prosecutions Under the IDA 1985 C. Investigation and Surveillance 2. Preventative Measures A. The City Code B. The Stock Exchange C. Statutory Reporting and Disclosure Requirements D. 'Chinese Walls'182 3. Sanctions A. The IDA 1985 B. Financial Services Act 1986 C. Regulatory Sanctions D. Civil Litigation IV. OTHER STOCK-RELATED INFRACTIONS V. INTERNATIONAL LAW 1. Jurisdiction 2. International Cooperation A. General Mechanisms for the Gathering of Evidence B. Specific Mechanisms for Information Exchange Directly Concerned with InsiderTrading C. United Kingdom Domestic Legislation VI. THE EC DIRECTIVE280 National Legislation Other European States Chapter 15 AUSTRIA I. OVERVIEW 1. Introduction 2. Background A. Capital Markets B. Internal Bank Organization C. Special Statutory Environment II. DEFINITION OF INSIDER TRADING 1. Inside Information A. Inside Information Under the Regulation B. Inside Information Pursuant to Section 82(5) of the Act 2. Categories of Insiders A. Primary Insiders B. Secondary Insiders 3. Presumption of Knowledge 4. Prohibited Activities A. Prohibited Activities Under the Regulation B. Exceptions C. Prohibited Activities Pursuant to Section 82(5) o/the Act III. CONTROL OF INSIDER TRADING 1. Supervisory Authorities A. Supervision of Insiders Under the Regulation B. Supervision of Insiders Pursuant to Section 82, Paragraphs 5 and 6 of the Act 2. Preventive Measures A. General B. Content o/the Chamber Guidelines 3. Sanctions A. Sanctions Under Criminal Law B. Sanctions Under the Act C. Money Damages as Civil Sanctions D. Civil Sanctions Under the Agreements IV. OTHER STOCK-RELATED INFRACTIONS V. INTERNATIONAL LAW 1. Jurisdiction 2. International Cooperation Chapter 16 FINLAND I. OVERVIEW II. DEFINITION OF INSIDER TRADING 1. Inside Information 2. Categories of Insiders 3. Presumption of Knowledge 4. Prohibited Activities III. CONTROL OF INSIDER TRADING 1. Supervisory Authorities 2. Preventive Measures A. Restrictions on Trade B. Persons whose Trade is Restricted C. Restrictions D. Disclosure Rules E. Persons to Whom the Disclosure Rules Apply F. Obligation to Disclose 3. Sanctions IV. OTHER STOCK-RELATED INFRACTIONS V. INTERNATIONAL LAW 1. Jurisdiction 2. International Cooperation VI. THE EC DIRECTIVE Chapter 17 Liechtenstein I. OVERVIEW II. DEFINITION OF INSIDER TRADING III. CONTROL OF INSIDER TRADING IV. OTHER STOCK-RELATED INFRACTIONS V. INTERNATIONAL LAW VI. THE EC DIRECTIVE Chapter 18 Norway I. OVERVIEW II. DEFINITION OF INSIDER TRADING 1. Inside Information 2. Categories of Insiders 3. Presumption of Knowledge 4. Prohibited Activities III. CONTROL OF INSIDER TRADING 1. Supervisory Authorities 2. Preventive Measures 3. Sanctions IV. INTERNATIONAL LAW V. PROPOSED NEW LEGISLATION Chapter 19 Sweden I. OVERVIEW 1. Legislation in Force 2. Self-regulation 3. Case Law II. DEFINITION OF INSIDER TRADING 1. Inside Information 2. Categories of Insiders 3. Presumption of Knowledge 4. Prohibited Activities III. CONTROL OF INSIDER TRADING 1. Supervisory Authorities 2. Preventive Measures 3. Sanctions IV. OTHER STOCK-RELATED INFRACTIONS V. INTERNATIONAL LAW 1. Jurisdiction 2. International Cooperation VI. THE EC DIRECTIVE Chapter 20 Switzerland I. OVERVIEW II. DEFINITION OF INSIDER TRADING 1. Inside Information 2. Categories of Insiders 3. Presumption of Knowledge 4. Prohibited Activities III. CONTROL OF INSIDER TRADING 1. Supervisory Authorities 2. Preventive Measures 3. Sanctions IV. OTHER STOCK-RELATED INFRACTIONS V. INTERNATIONAL LAW 1. Jurisdiction 2. Applicable law 3. International Cooperation Part II THE UNITED STATES AND JAPAN Chapter 21 United States of America I. OVERVIEW II. DEFINITION OF INSIDER TRADING 1. Inside Information A. Confidentiality B. Materiality 2. Categories of Insiders A. Corporate Insiders B. Traders, Tippers and Tippees C. Corporate Entities 3. Presumption of Knowledge 4. Prohibited Activities A. Section 10(b) and Rule 10b-5 B. Section 14( e) and Rule 14e-3 C. Section 17(a) of the Securities Act III. CONTROL OF INSIDER TRADING 1. Supervisory Authorities 2. Preventive Measures A. Preventing Insider Trading B. Preventing Continued Violation 3. Sanctions A. Sanctions in Proceedings by the S.E.C. B. Criminal Liability C. The Interplay of Civil and Criminal Sanctions in Enforcement Proceedings D. Civil Remedies in Private Actions IV. OTHER STOCK-RELATED INFRACTIONS A. Fraudulent, Deceptive or Manipulative Transactions B. Prohibitions not Based on Fraud: Short-swing Profits V. INTERNATIONAL LAW 1. Jurisdiction 2. International Cooperation VI. CONCLUSION Chapter 22 Japan I. OVERVIEW 1. Before the 1988 Amendment A. Article 58 (Unfair Securities Dealings) B. Article 189 (Disgorgement of Short-Swing Profits) C. Administrative Supervision of Securities Companies 2. The 1988 Amendment A. Clarification of the Criteria for Insider Trading B. Enhancement of Administrative Supervision C. Enhancement of the Provisions on Disgorgement of Short-Swing Profits II. THE DEFINITION OF INSIDER TRADING 1. Inside Information 2. Categories of Insiders 3. Presumption of Knowledge 4. Prohibited Activities III. CONTROL OF INSIDER TRADING 1. Supervisory Authorities 2. Preventive Measures 3. Sanctions A. Criminal Sanctions B. Administrative Sanctions C. Civil Sanctions IV. OTHER STOCK-RELATED INFRACTIONS V. INTERNATIONAL LAW 1. Jurisdiction 2. International Cooperation VI. CONCLUDING NOTE Part III ANNEXES ANNEX A - EC DIRECTIVE ANNEX B - COUNCIL OF EUROPE'S CONVENTION ANNEX C - BELGIUM ANNEX D - DENMARK ANNEX E - FRANCE ANNEX F - GREECE* ANNEX G - IRELAND ANNEXH-ITALY ANNEX I-LUXEMBOURG ANNEXJ-PORTUGAL ANNEX K - SPAIN ANNEX L - UNITED KINGDOM ANNEX M - AUSTRIA ANNEX N - FINLAND ANNEX O - NORWAY ANNEX P - SWITZERLAND ANNEX Q - UNITED STATES ANNEXR-JAPAN Back Cover