These are the words of the Tribunal administratif des marchés financiers, when it reminded the Autorité des marchés financiers that a freeze order is an extraordinary power vested in the court, which requires meaningful supervision and control measures in the public interest.

Context

On November 18, 2020, the Tribunal administratif des marchés financiers (the Tribunal) issued, on an urgent and ex parte basis, freeze and cease trade orders in connection with the activities of several defendants, including a cryptocurrency exchange platform, for a period of 12 months. The Autorité des marchés financiers (the AMF) obtained these orders in the context of its investigation into alleged breaches of prospectus-free offerings and unregistered broker activity.

These orders were first extended on November 12, 2021 until February 25, 2022 to allow the defendants to present their contestations.

Decision

In its decision dated February 24, 2022, the Tribunal concluded that the AMF investigation in its broad sense was indeed still ongoing, and that the initial grounds for issuing the freeze and cease trade orders still existed. However, the Tribunal refused the AMF’s request for a 12 month extension, and instead issued a four-month extension.

According to the Tribunal, this four-month period would allow the AMF to provide a report on the progress of its investigation, as well as the next steps and deadlines. This reporting was “necessary”, according to the Tribunal.

At the hearing, the AMF argued that it was still waiting for feedback on requests for information and additional information from several payment exchange platforms. According to the AMF, obtaining this information could take several months. In addition, several months would then be required for the AMF to prepare its investigation report, and for the AMF's legal department to assess the case. The AMF also mentioned that this was a complex case in a new field.

It is important to note that the Tribunal did not share the AMF's contention that another full year was required to continue its investigation, all without being accountable to anyone. On the contrary, the Tribunal held that this investigation had been ongoing since the summer of 2020, which it considered constituted a long time. The Tribunal also held that the alleged offences took place over a period of only about six months. The Tribunal then reminded the AMF that a freeze order is an extraordinary power, which requires meaningful supervision and control measures.

The Tribunal also emphasized that, to reinforce the public’s trust, AMF investigations must be conducted in a rigorous manner, with celerity and diligence, especially when such orders affect individuals and/or investors.

Without questioning the quality of AMF investigations, it is not uncommon in practice to hear similar and generic arguments from the AMF when it comes to the extension of certain types of orders, whether it is in an administrative or criminal context. For example, we can think of renewal of things seized under the Code of penal procedure.

We note that the issue of investigative delays continues to be critical for all market participants. The Tribunal’s decision reinforces the fact that obtaining the extension of such freeze and cease trade orders should not be an assured result. The AMF must be held accountable, and any person impacted by such orders should take the opportunity at these hearings to ensure that its interests are protected.