The disclosure by a journalist of inside information relating to the forthcoming publication of an article reporting rumours concerning companies listed on the stock exchange is lawful where it is necessary for the purpose of carrying out a journalistic activity and respects the principle of proportionality, the Court of Justice of the European Union ruled on Tuesday 15 March (Case C-302/20).
A journalist is challenging a decision by the French Financial Markets Authority to impose a fine of €40,000 for disclosing inside information to UK residents. The journalist is said to have informed these persons of the forthcoming publication on the Daily Mail newspaper’s website of articles relaying rumours of takeover bids for the shares of Hermès and Maurel & Prom at prices well in excess of the share prices. Shortly before the articles were published, these UK residents bought the securities in question and sold them after the articles were published, pocketing a large capital gain in the process.
According to the Court of Justice, information relating to the forthcoming publication of a press article reporting a market rumour concerning a listed company is capable of constituting information of a “precise nature” and therefore falling within the scope of the concept of “inside information” under the Market Abuse Directives (2003/6 and 2003/124) and Regulation (596/2014), where it mentions, inter alia, the price at which the securities will be purchased, the name of the journalist who wrote the article and the press organisation that published it.
The European Court is of the opinion that the publication of inside information for journalistic purposes can be justified under EU law by virtue of the freedom of the press and the freedom of expression. However, this is lawful only where it is regarded as being necessary for the exercise of his or her profession and as complying with the principle of proportionality.
In the present case, it is for the national court to answer the following questions: was it necessary for the journalist seeking to verify a market rumour to disclose to a third party, not only the content of that rumour, but the fact that an article reporting that rumour would soon be published? Would the prohibition of such disclosure be excessive because of its dissuasive effect on the exercise of journalistic activity?
See the judgment: https://aeur.eu/f/s9 (Original version in French by Mathieu Bion)