Logwise has continuously assessed that interpretation and enforcement of MAR inside information regulations would subsequently become stricter, following its original 2016 and 2017 implementation measures. These predictions have again been vindicated. The most recent example concerns Swedish national competent authority (“FI”) cases resulting, during summer and autumn 2021, in serious investigations, FI sanctions and a much noticed fine issued by a public court. An important takeaway is thereby the very strict interpretation of both the term “immediately” and “as soon as possible” – and the wider implications thereof.

Firstly, it should be highlighted that supervisory authorities across the EU had delivered quite some strict applications already per the start of 2021 concerning the MAR term “as soon as possible”. Also, it has become evident that supervisory authorities (incl. FI) have not only become stricter during the very last few years – but even that there appears to be a substantial backlog in the sense that we 2021 see cases emanating from actions, or lack of actions, back in 2017.

The FI September 2021 judgement:

FI imposed a sanction on a company for not ”immediately” informing FI about a publication of a delayed disclosure. FI considers even a one-hour delay to constitute a MAR Art. 17(4) breach. FI thereby highlighted that the Art. 17(4) requirement that the notification shall be made “immediately” differs from, e.g. Art. 17(1) requiring disclosure “as soon as possible”. Notably, FI neither indicates that even a delay of e.g. 50 or 59 minutes would be acceptable.

As a Logwise user, you can easily avoid this risk. Following your publication (press release), login in to Logwise and close the related insider project (by selecting “Close project and notify the competent authority”). A notification will automatically be generated for you and in supported jurisdictions sent directly to the NCA (e.g. Sweden).

It should thereby further be noted that FI relies on the 17(4) paragraph 3 exemption. Pursuant thereto, in Sweden, the notice to FI only concerns that disclosure of the information was delayed – whereas a written explanation of how the 17(4) conditions were met is to be provided only upon request. In some EU countries instead both these notifications shall be made “immediately”.

Logwise supports swift and secure filing of both these items. Regardless of the different possible variations of interpretation between different EU supervisor authorities, the safe play is hence to stick to a capability to notify “immediately” in a strict sense – concerning both these items.

The FI October 2021 judgement:

FI also imposed a sanction on a company for not publishing the information ”as soon as possible”.

FI considered that an issuer, through its cooperation with the company from which the inside information emanated, was obliged to actively monitor that company’s disclosures and to be adequately prepared to ensure that inside information regarding the issuer would be properly disclosed to the market as soon as possible.

Noting also that the issuer had certain previous knowledge of that other company, it was clear that already when the MD of the issuer came of his meetings (17:30) 3 hours after the release of the information from the other company, the issuer should already had begun its analysis. The issuer disclosed the morning after (8:30).

Neither the fact that the delay period was after work hours – when also the trading venue was closed – nor that the company was very small changed FI’s assessment.

Concerning a very ancillary situation, 20 days later, FI considered this issuer’s delay of 23 minutes (after the disclosure from that other company) to be acceptable, merely “considering the circumstances in the case”.

FI is extremely explicit concerning that the insider list must be established as soon as inside information arises in a company – even if a company intends to disclose as soon as possible, hence not only when it decides to postpone disclosure.

Further, the insider list was permanent. It lacked both indication of the information covered and the reason for the inclusion of the named persons. The list was hence not event-driven. It was not possible to determine who or what actually had access to the information at a given time. The deficiencies made it difficult to determine, among other things, whether the circle of persons with access to inside information had been limited in such a way that the information had not been disclosed to more persons than deemed necessary. The list therefore did not comply with the format for the establishment and updating of the insider list (per Art. 18).

FI explicitly highlighted, that MAR infringements do not require any subjective elements, but the provisions are essentially constructed on the basis of strict liability, which means that there is no requirement of intent or negligence.

The fact that the trading venue already delivered its criticism and sanction – which the issuer referred to as latent penalty – did not constitute a reason for FI to abstain from its (further) sanction. FI thereby also considered that the trading venue issued its criticism in anonymized format. It might however be noted that such anonymization seldom has any substantial effect concerning market participants who are willing and able to google.

Finally, FI explicitly considers that its sanctions, penalty fees, must have deterrent effect.

Finally, these examples of stricter supervisory approach further call for issuers, advisers and market participants subject to MAR insider requirements, to continuously diligently review their MAR routines and tools. In this context merely the example of when a strict interpretation of the MAR terms “immediately” and “as soon as possible”, call for extra precaution in many aspects. Credit institutions and financial institutions should preferably carefully review their preparedness concerning Art. 17(6). This, since if the supervisory authority does not consent to delayed disclosure, the issuer shall disclose the inside information immediately.

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