Analysis of Insider Trading Law Across Different European Countries

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Assignment 1
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Insider Trading Regulation

Belgium

* The most important laws about insider trading:

In general
In the context of the overall modernization of the legal framework for financial activities, undertaken since 1989, Belgium has implemented the E.C. Directive of November 13, 1989 on insider trading (89/592/EEC).

Under Belgian law, insider trading is prohibited pursuant to Articles 181 to 193 of the Law of December 4, 1990 regarding the financial operations and financial markets. The prohibition set forth in Belgian law is far-reaching and covers:

* the buying or selling of transferable securities, either directly or indirectly, for one's own account or for the account of another, in or outside the stock exchange, with or without the involvement of a professional intermediary;

* the disclosing of inside information to a third party, unless done in the normal exercise of the profession or function;

* the use of the inside information to recommend to a third party to buy or sell transferable securities.

The law contains an obligation to a periodic and occasional supply of information (art.7) as well as a prohibition of insider trading (art. 27 en 28) Companies have 3 obligations with regard to the public in general, and their shareholders more specific: a) ensure an equal treatment between shareholders (art.2 §1, art.11 §1 en art.17 §1 KB); b) supply periodic information in the form of a semi-annual report on their company results (art. 3 KB); c) supply occasional information (art.4 en art.12 KB).

It’s primarily this last obligation, which is important to us in the context of insider trading.. Privileged information
Inside information, for the purposes of this Code, shall mean information which has not been made public, of a sufficiently precise nature, relating to one or several issuers of transferable securities or other financial instruments or to one or several transferable securities or other financial instruments, which, if it were made public, would be likely to have a significant effect on the price of the transferable security or securities or the other financial instrument or instruments in question. (art. 181)

Forbidden actions
1 °) One is prohibited from acquiring or disposing of, for his own account or for the account or a third party, either directly or indirectly, transferable securities or other financial instruments to which that information relates. (art. 182, § 1) 2 °) One is prohibited from disposing privileged information to a third party, except as part of the normal exercise of his employment, profession or functions, to a third party pursuant to this privileged information, to recommend securities or other financial instruments to buy or to sell or to let buy or sell by a third party. (art.183) * Who are defined as insiders + what are the possible penalties for insider trading?

* Who are defined as insiders?

a) Primary insiders
Any person who:
(i) by virtue of his membership of the administrative, management or supervisory bodies of the issuer, (ii) by virtue of his holding in the capital of the issuer,
(iii) or because he has access to such information by virtue of the exercise of his employment, profession or duties, possesses information that he knows, or ought reasonably to know, is inside information. (art.182, §1)

For didactic reasons, people often make a distinction between these three categories: i) the 'real insiders': directors, partners ... who are, due to work, closely involved in the company policy; ii) the 'quasi insiders': auditors, lawyers, personnel ... ; they are more distanced from the company policy; iiI) the 'outsiders': journalists, financial analysts, the man in the street, ... b) Secondary insiders

Everyone not mentioned in the previous articles and who possesses information of which he/she knows/should...
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