Brussels, 15/03/2002 (Agence Europe) - The adoption by the European Parliament of Luxembourg Socialist, Robert Goebbels' report on market abuse, almost unanimously, on Thursday, provides an outline of what constitutes market manipulation that will to a certain extent make it more difficult for insider trading. European Commissioner, Fritz Bolkestein, welcomed the report "with satisfaction", which "resolutely defends the goal of the Directive". Accepting the majority of amendments, he hoped that it would be possible to arrive at an agreement with the Council before June. Nevertheless, the very precise wording of what constitutes manipulation, introduced by the Parliament, clearly sweeps away the political agreement with the Council concluded by unanimity last December and could create a stumbling block between Member States, noted one specialist on the case.
During the debate, MEPs and Commissioner Bolkestein stressed that suspicion of manipulation around the time of 11 September and scandals such as that of Enron have demonstrated the urgency to act. Robert Goebbels pointed out while presenting his report to the plenary session that, "Faced with terrorist groups benefiting from anonymity in stock market transactions to finance themselves, Europe must act on the financial front as well". he added that, "when insider dealers get rich in a few minutes, it is the small investors and honest professionals who pick up the bill".
The EP has hardened its definition of abuse and has introduced into the body of the Directive a list of what constitutes market manipulation that the Commission had placed, by way of illustration in the annex: concerted action that is intended in an indirect way to fix share prices or distribution of false information. It also introduced amendments that focus on what motivates the different criminal actions, whilst the Commission had based its proposal on an "objective" approach". Parliament's definition explains, for example, that the distribution of false or misleading information, "knowing or could reasonably be considered to have had knowledge of information that was false or misleading", or that distribution of an opinion on an financial instrument allowing the issuer to "profit from the impact of the said opinion on the instrument in question, without having simultaneously made public the conflict of interest".
The Commission points out that in practice, this change will allow those accused of manipulation to defend themselves more easily, notably journalists providing information on the stock exchange. Cases involving journalists have provoked some heated exchanges in the British press.
At the same time, Parliament wants to harden sanctions. Observing, together with the Commission that the subsidiarity principle does not allow harmonisation of criminal and administrative sanctions in Europe, the rapporteur has asked the Commission to draw up a list outlining existing sanctions and administrative measures in Member States. Mr Goebbels pointed out that, "Only thirteen criminal sanctions have been applied for market manipulation between 1995 and 2000 in 17 of the countries in the European Economic Area". The rapporteur also indicated that Member States' regulation authorities should be provided with more financial means and that the Securities and Exchange Commission in he USA had a budget that was "Fifty times higher than that of the German Regulator".