|Author (Person)||Chapman, Peter|
|Series Title||European Voice|
|Series Details||Vol.7, No.22, 31.5.01, p2|
A DRAFT directive calling for criminal sanctions for insider trading and market abuse is under attack from a group of European stock markets who fear they would hinder their own efforts to administer swift justice to suspected wrongdoers.
Under the proposals launched this week, financial services chief Frits Bolkestein wants member states to agree to similar penalties for insider dealing. Currently some countries can impose prison sentences for an offence that carries only a light fine elsewhere.
But Gregor Pozniak, deputy director-general of the Federation of European Securities Exchanges, said these could undermine the possibility of markets taking civil action before cases reach the criminal courts - which require higher levels of proof for a conviction. "Exchanges and brokers know who the crooks are. Criminal sanctions should be supplemented by rules for regulators to apply administrative law closer to the thief," said Pozniak, claiming that the industry itself was best placed to keep track of economic crime that is a "moving target"."There is also a danger that in some jurisdictions the legislature will lean back and say, 'We did it now, we forbade market abuse and now it won't happen any more.' There is the risk of complacency."
FESE also attacked Bolkestein's call for a major role for 'administrative authorities' separate from markets themselves to take the responsibility for patrolling markets in a bid to make conflicts of interests less likely.
The administrative authorities would also take on a key role in another draft directive setting pan-EU rules for prospectuses of firms raising money on capital markets. Under this directive the authority, and not the markets, would have responsibility for scrutinising these complex financial documents and would take the ultimate decision on their approval.
But Pozniak said this would add an extra layer of unnecessary bureaucracy and would undermine the work of 50% of FESE's members that have developed "streamlined and effective" in-house systems for conducting the job envisaged for the administrative authorities.
He said FESE had written to Bolkestein insisting that their "attachment to creating and maintaining high quality standards and enforcing them is beyond doubt".
The two directives are the first to be proposed that would use the new procedures recommended by the group of 'wise men' headed by Baron Alexandre Lamfalussy.
A draft directive calling for criminal sanctions for insider trading and market abuse is under attack from a group of European stock markets who fear they would hinder their own efforts to administer swift justice to suspected wrongdoers.
|Subject Categories||Business and Industry, Internal Markets|