In comparison with the laws in many other jurisdictions, the prohibition on insider trading stipulated in the Finnish Securities Markets Act and the Penal Code is relatively recent. Prior to the enactment of the Securities Markets Act in 1989 there was no specific legislation on the issue. There is thus no significant body of case law. In fact, the Supreme Court has never dealt with a case directly involving a securities law crime.

Nevertheless, in recent years there have been several court cases relating to insider trading, mainly due to the increased supervisory activity of the Financial Supervision Authority (FSA). Most of these cases have involved minor securities transactions and have been settled at first instance. However, insider issues recently gained coverage in the media once again when the Helsinki District Court began considering of two new insider trading cases. These are expected to shed light on the interpretation of the Penal Code and the Securities Markets Act, especially if appealed to higher courts. Both cases relate to market transactions that took place in 1999.

Investigation and prosecution of suspected insider trading cases generally takes several years, giving rise to public concerns about whether the police have sufficient resources and whether the FSA has been sufficiently active and diligent in its supervisory role. However, the supervision and monitoring systems of the FSA have reportedly improved since 1999. The FSA recently reported that it scrutinized a total of 83 market transactions in 2002, of which 22 cases are still under close review. Further, it has brought four alleged violations of insider trading rules and two alleged violations of disclosure rules to the attention of the police.

One of the two pending court cases partially relates to a company's acquisition of its own shares. The prosecutor resolved not to prosecute the whole board of directors, but argued nevertheless that even a pre-determined plan regarding the acquisition of company's own shares could constitute prohibited use of inside information under certain circumstances. Consequently, listed companies have no legal certainty or clearly established safe harbour rule with regard to how to acquire safely their own shares in view of insider trading rules, although the guidelines issued by the Helsinki Stock Exchanges provide certain procedural and timing recommendations.

For further information on this topic please contact Ari-Pekka Saanio at Borenius & Kemppinen by telephone (+358 9 615 333) or by fax (+358 9 61 53 34 99) or by email ([email protected]).