Most professionals affected by MAR are aware that, to be classified as insider information, the information needs not only to be considered precise with a likely significant price effect – but also not public. Still, a question which has been recently debated is what is actually considered “public” data.
This is especially true given the avalanche-like increase of utilizing different forms of alternative (big) data. Such data can contain advanced Internet of Things (IoT), website scrapping, processed social media data, advanced transactional/financial institutions data, very detailed sales data from major actors in a certain field, advanced shipping data, credit card transactions, processed satellite information data, mobile phone location data, and much more.
Regardless of all the reputational and regulatory risks related to Internet and privacy legislation (GDPR etc.), concerned professionals are also worried over the MAR-perspective with its related insider and related securities law risks. The originality level of certain processed big data combined with a strong demand create a risk of grey area which could also border to breach of confidentiality and/or breach of fiduciary duties. A relevant question in this context would also be if such information can be acquired, purchased, by anyone or if there are limitations. In some cases data providers sell certain data with a certain exclusivity level for only a few customers or certain very sophisticated investors. After all, the underlying or unwritten pitch is indeed that the end-user will obtain an edge by buying the exclusive information.
Difficult borderline cases could also arise in case of e.g. processed data emanating from advanced surveys and interviews. It is not excluded that such data can in fact be non-public. Some data is even produced by third-party providers which can have the nature of intelligence or private investigations firms – which field is in turn notorius for actually not using publicly available data. Further, inside information can emanate from many different sources outside of the issuer. Not only a rogue employee, consultant or stakeholder can be the effective source – but also a competitor, a leading analyst/journalist or a regulator.
Finally, a generally important starting-point is that EU legislation is founded on a principle of the level playing field and avoiding any “unfair advantage”. These general principles in the EU combined with the still quite new-born MAR has resulted in a not so obvious or well established practical application (as compared to the more established US Material Non-Public Information, MNPI, practices).
An obvious approach to all these risks and legal uncertainty is to be very careful. Sometimes the data available can easily be determined to be public. There could also be cases when there are so many immediate concerns over the data that it seems quite clear to steer clear, to consider it as inside information. The commercial rationale for maximizing the use of available relevant information is still sometimes so imperative that the cases which might at face be deemed borderline needs to be carefully analysed by external legal experts.
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