First AFM fine for disclosure of inside information
A fine imposed by the AFM for disclosure of inside information was recently upheld by a court of appeal in the Netherlands. The court mitigated the fine to EUR 11,400.
Mr Muller, director and majority shareholder of Spyker N.V., was fined by the AFM in 2008. The AFM found that Mr Muller had disclosed inside information to a third party. Even though the disclosure had not resulted in a transaction, the AFM was of the view that Mr Muller violated market abuse rules. This was the first time that the AFM imposed a fine for violation of the prohibition of disclosure.
In setting the fine, the court of appeal considered the following:
- The prohibition on disclosure of inside information was breached. In this regard, the court found that it is not relevant whether the information lead to the actual use of the information.
- The statutory exception that disclosure was necessary in the performance of a person's duties, profession or position could not be invoked. This would only be justified if there is a close connection between the disclosure and the performance of the duties, profession or position and if the disclosure was strictly necessary for that performance. In this case, Mr Muller could have avoided disclosure.
- There was a disproportionate amount of press coverage at an earlier stage in the procedure, justifying a lower fine.
Three fines for N.C.I.C. for illegal (sub-) brokerage in consumer credit
In May 2012 the AFM imposed three fines on N.C.I.C. B.V. ("NCIC") and its indirect executive director for illegal (sub-)brokerage in consumer credit.
A EUR 60,000 fine was imposed on an indirect executive director of NCIC's holding company. The AFM concluded that he was aware that NCIC was involved in illegal (sub-)brokerage and that he had the authority and reasonable duty to end this practice but failed to do so. In this case, the director had filed a license application with the AFM on behalf of NCIC for consumer credit brokerage. The licence application concerned "generating leads for external and internal customers" by a call centre. The director was therefore apparently aware of the fact that NCIC required a licence to pursue these activities. After the AFM submitted a number of questions to NCIC, the director subsequently withdrew the licence application. The AFM then established that NCIC, under the actual management of the director, continued its activities unchanged.
The basic amount for violation of this law is EUR 2 million. When determining the amount of this fine, the AFM considered the severity and duration of the violation, culpability and financial resources of the director.