Brussels, 06/12/2012 (Agence Europe) - On Wednesday 5 December, the EU27 member states reached broad agreement on the introduction of criminal penalties for market abuse like insider trading and market manipulation. The penalties will be set at national level, but the Cypriot Presidency points out in a press release that the EU27 ministers have agreed that the penalties must be “effective, proportionate and dissuasive.” Criminal penalties will also be introduced for fiddling with benchmarks and the European Commission has already added this as a crime in draft legislation in the wake of the LIBOR interbank lending rate fraud by Barclays in the City of London earlier this year. The new EU rules will have to enter application two years after they officially come into force.
The draft legislation lays down fines of up to €5 million for individuals and €10 million for companies for market abuse. Austria says it will not be able to levy such large fines because this would require changes to its constitution.
The Council of Ministers' compromise will allow member states to not levy fines if there are already criminal sanctions in their legal systems to punish infringements of this EU legislation. In a statement, five member states - Belgium, Spain, France, Italy and Portugal - regret that it wasn't possible to introduce more coherent and effective harmonisation.
Negotiations will now start with the European Parliament to reach an inter-institutional agreement on the draft legislation amending EU Directive 2003/6/EC. The Parliament says that for the most serious crimes, financial players found guilty of market abuse should soon face a minimum of five years in prison (see EUROPE 10707). (MB/transl.fl)