CopiedStricter MAR Inside Information Regulations Enforcement and The Importance of Acting “Immediately” and “As Soon As Possible”

Logwise has continuously assessed that the interpretation and enforcement of MAR inside information regulations would become stricter following its original 2016 and 2017 implementation measures. Recent developments have vindicated these predictions, with the most recent example being cases from the Swedish National Competent Authority (FI) during the summer and autumn of 2021, resulting in serious investigations, sanctions, and fines issued by a public court. These cases underline the strict interpretation of the terms “immediately” and “as soon as possible,” along with their broader implications.

FI September 2021 Judgment: “Immediately” vs. “As Soon As Possible” Copied

FI sanctioned a company for not informing FI “immediately” about the publication of a delayed disclosure. FI considered even a one-hour delay to constitute a MAR Art. 17(4) breach. The judgment highlighted that the requirement for immediate notification differs from Art. 17(1), which requires disclosure “as soon as possible.” Importantly, FI did not indicate that a delay of even 50 or 59 minutes would be acceptable.

As a Logwise user, you can mitigate this risk by promptly logging in after a publication and closing the related insider project by selecting “Close project and notify the competent authority.” A notification will be automatically generated and, in supported jurisdictions, sent directly to the NCA (e.g., Sweden).

Differences in Requirements Across EU Countries Copied

In Sweden, the notice to FI only concerns the delayed disclosure of information, while a written explanation of how the Art. 17(4) conditions were met and must be provided upon request. In some EU countries, both notifications must be made “immediately.”

Logwise supports swift and secure filing of both types of notifications, ensuring compliance regardless of variations in interpretation among different EU supervisory authorities.

FI October 2021 Judgment: “As Soon As Possible” Copied

FI also sanctioned a company for not publishing information “as soon as possible.” The issuer had an obligation to actively monitor the company from which the inside information emanated and to ensure timely disclosure.

Key takeaways include:

• The issuer had previous knowledge of the other company and should have begun analysis immediately after a meeting at 17:30, even though the information was disclosed at 8:30 the next morning.
• Factors like the delay after work hours, the closed trading venue, or the small company did not change FI’s assessment.

Importance of Timely Insider List Establishment Copied

FI emphasized that an insider list must be established when inside information arises within a company, regardless of whether the company intends to disclose it promptly. The insider list must include details such as the information covering the reason for including named persons and be event-driven.

Key deficiencies noted by FI:

• The insider list was permanent, lacked specific details, and did not indicate who had access to the information at a given time.
• These deficiencies made it difficult to determine whether access to inside information had been appropriately limited, as required by Art. 18.

Strict Liability Under MAR Copied

MAR infringements do not require subjective intent. FI highlighted that the provisions are based on strict liability, meaning intent or negligence is not required.

Even if the trading venue had already issued criticism or sanctions, this did not prevent FI from imposing further sanctions. FI noted that anonymized criticism seldom shields market participants from scrutiny, as information can still be identified by those willing to search.

Continuous Review of MAR Routines and Tools Copied

These examples of stricter supervisory approaches call for issuers, advisers, and market participants subject to MAR insider requirements to diligently review their MAR routines and tools. In particular, a strict interpretation of the terms “immediately” and “as soon as possible” requires extra caution in many aspects.

Credit and financial institutions should carefully review their preparedness concerning Art. 17(6), as supervisory authorities may not consent to delayed disclosure, necessitating immediate disclosure of inside information.

Act swiftly on inside information regulations—book a demo today and ensure immediate compliance with Logwise.