The European Court of Justice's judgment in the case of Spector Photo Group and Van Raemdonck v Commissie voor het Bank-, Financie- en Assurantiewezen (CBFA) (Case C- 45/08) reached a number of conclusions about the Market Abuse Directive ("the Directive") and its interpretation which may impact on the way in which European regulators approach enforcement action.

Business impact

The potential importance of the decision is reflected by the fact that Belgium, Germany, France, Ireland, Italy, Cyprus, Portugal, the UK and the European Commission submitted observations to the ECJ in the course of the proceedings.

Most significantly, the Court ruled that where it is established that a person has dealt while in possession of inside information, the use of that information may be presumed. This means that a regulator is not obliged to demonstrate that a decision to trade was caused or influenced by the possession of inside information; it need only establish:

  • possession of inside information by a primary insider (or by some other person who knew or ought to have known that it was inside information); and
  • the fact of trading whilst in possession of that information.

Although evidence can be led to rebut that presumption, the burden is on the defendant to establish that he has not taken unfair advantage of the benefit gained from that information, and that the transactions were entered into legitimately and dutifully. In principle, this may well mean that some regulators may find it easier to prove market abuse in administrative enforcement cases. Firms should be giving some thought to how they record their decision-making processes in order to ensure that they are in a position to evidence that the trading of particular securities was wholly independent from the possession of inside information.

This judgment will create some interesting issues in a number of jurisdictions, notably in the UK where the relevant national provision currently requires proof of dealing "on the basis" of inside information (in contrast to the Directive uses the language "using" inside information), and in Belgium, where the current national provisions appear to be more restrictive than the Directive. By contrast, the approach adopted by the AMF in France in a number of recent cases is more closely aligned to that of the European Court of Justice.

Our briefing reviews the judgment, examines the situations in which a firm or individual may be able to lead evidence to rebut the presumption of use of the inside information, and considers the potential impact of the decision in Belgium, France, Germany, the Netherlands, Spain and the United Kingdom.

The Spector case

The Facts  

On 21 May 2003, Spector Photo NV (Spector), a Belgian listed company, informed Euronext Brussels of its intention to buy a certain number of its own shares. The purchases were being made to implement the stock option programme which Spector had made available to its staff.

Between May and the end August 2003, Spector bought a total of 27,773 shares. Initially, four tranches of 2,000 shares were purchased. However, on 11 and 13 August, orders for the purchase of 2,000 shares and for 18,000 shares1 respectively were placed by one of Spector's managers, Mr Van Raemdonck, at an average price of EUR 9.97. The exercise price of the options was EUR 10.45.

Spector subsequently made announcements on 21 August and 11 September, publishing information about a propose acquisition, and about its results. After the publication of the results, the price of Spector's shares increased by 8%, reaching EUR 12.50 by year end.

The Belgian Banking, Finance and Insurance Commission (the CBFA) instructed the internal auditor to conduct an investigation into the misuse of inside information in the case of the share purchases effected based on the orders of 11 and 13 August 2003. The auditor concluded that the purchasing pattern had changed as regards both the number of shares and the price limits on 13 August 2003, and that the purchases had assumed some urgency at that point. He pointed out that Spector and Mr Van Raemdonck had assumed that the share price would rise when the results and details of the proposed acquisition became public, so that following publication Spector would be required to pay a higher purchase price.

CBFA took enforcement action against Spector and Mr Van Raemdonck, alleging insider dealing in respect of the orders placed in August 2003, and in 28 November 2006 fined Spector and Mr Van Raemdonck €80,000 and €20,000 respectively.

The parties appealed against the decision and fines to the hof van beroep te Brussel (the Brussels Court of Appeal), arguing (amongst other things) that the CBFA had failed to establish that the share purchases at issue were made because of the imminent publication of the results of the company concerned.

The Brussels Court referred the matter to the European Court of Justice on the basis that it was uncertain about the kind of evidence on which to base a finding that inside information had been ‘used’, and about the appropriate criteria for evaluating the proportionality of sanctions. Several issues relating to Belgian legislation and Belgium's implementation of the Directive were also raised.

Interpreting the insider dealing prohibition

The genesis of the provision

In considering the insider dealing prohibition in the Directive, the Court considered the legislative history of the provision. The original Insider Dealing Directive (89/592/EEC) had required Member States to prohibit persons who possessed inside information from taking advantage of that information with full knowledge of the facts by acquiring or disposing of for his own account or for the account of a third party, either directly or indirectly, transferable securities of the issuer or issuers to which that information related. The language ‘taking advantage’ suggested that the transaction effected had to be carried out specifically on the basis of inside information and with the intention of making a profit or avoiding a loss.

The Court noted that when it came to consider a prohibition on insider dealing in the context of the Directive, the European Parliament sought to replace the verb ‘to take advantage of’ with the verb ‘to use’ in order to remove any element of purpose or intention from the definition of insider dealing. As it was finally drafted, article 2(1) of the Directive aims to prohibit

"any person referred to in the second subparagraph [primary insiders] who possesses inside information from using that information by acquiring or disposing of, or by trying to acquire or dispose of, for his own account or for the account of a third party, either directly or indirectly, financial instruments to which that information relates."

The Court therefore confirmed its view that article 2(1) of the Directive defines insider dealing objectively. The rationale is that primary insiders have specific responsibilities to the issuer of the financial instruments to which the inside information relates. Because entering into a market transaction is necessarily the result of a series of decisions, one can exclude the possibility that the author of that transaction could have acted without being aware of his actions. Accordingly, where a market transaction is entered into while the author of that transaction is in possession of inside information, that information must, in principle, be deemed to have played a role in his decision-making.

The rebuttable presumption

It follows from this reasoning that once it is established that the person dealing was in possession of inside information at the time of dealing, as set out in article 2(1), an intention to use the information can be presumed.2

The presumption is, however, open to rebuttal, and the provision should not be interpreted in such a way that would automatically bring all primary insiders who, while in possession of inside information, enter into a market transaction within the prohibition on insider dealing. Such a wide interpretation could lead to the prohibition of certain market transactions which do not necessarily infringe the interests protected by the Directive.

The Court therefore found that it is necessary to distinguish between ‘uses of inside information’ which are capable of infringing those interests from those which are not.

The purpose of the prohibition

The Court confirmed that the aim of the prohibition against insider dealing in the Directive is to protect the integrity of financial markets and enhance investor confidence, and noted that that confidence depends, inter alia, on investors being placed on an equal footing and protected against the improper use of inside information. The essential characteristic of insider dealing, the Court held, consists in an unfair advantage being obtained from information to the detriment of third parties who are unaware of it and, consequently, the undermining of the integrity of financial markets and investor confidence.

To ensure that the scope of the insider dealing prohibition in Article 2(1) does not extend beyond what is appropriate and necessary to attain the aims of the Directive, the Court expressed the view that in some cases, a thorough examination of the factual circumstances would be required to ensure that the use of the inside information is actually unfair, so as to be prohibited by the Directive in the name of the integrity of financial markets and investor confidence.  

Uses of inside information which do not infringe the interests protected by the Directive

The Court noted that the preamble to the Directive contains several examples of situations in which the fact that a primary insider in possession of inside information enters into a transaction on the market should not in itself constitute ‘use of inside information’ for the purposes of Article 2(1):

  • the legitimate entering into market transactions by market-makers and bodies authorised to act as counterparties, and dutiful execution of orders on behalf of third parties [Recital 18] – without such an exclusion, there would be a risk of such persons being prohibited from carrying out an activity which is both legitimate and useful for the efficient functioning of the financial markets
  • the use of inside information relating to another company in the context of a public take-over bid or a merger proposal [Recital 29] – essentially, where an entity, after obtaining inside information concerning a specific company, subsequently launches a public take-over bid for the capital of that company at a rate higher than the market rate, this should not be regarded as prohibited insider dealing since it does not infringe the interests protected by that directive
  • transactions conducted in the discharge of an obligation that has become due to acquire or dispose of financial instruments where that obligation results from an agreement concluded before the person concerned possessed inside information [Article 2(3)]
  • the carrying out of a market transaction, in respect of which a prior decision to trade has been made [Recital 30] – otherwise this would prevent a person who decided to launch a public take-over bid from executing that decision, which would go beyond what is appropriate and necessary to achieve the purpose of the Directive, and could even adversely affect the efficient functioning of the financial markets by preventing public take-over bids

The Court therefore concluded that the question whether a primary insider in possession of inside information ‘uses that information’ within the meaning of Article 2(1) of the Directive must be determined in the light of the Directive's purpose, which is to protect the integrity of the financial markets and to enhance investor confidence. That confidence is based, in particular, on the assurance that they will be placed on an equal footing and protected from the misuse of inside information. Only use which cuts across that purpose will be prohibited insider dealing.

It is also worth noting that Recital 24 acknowledges that the establishment of "Chinese walls" can contribute to market integrity provided they are properly enforced and controlled. A firm with robust information barriers may seek to rely on these to rebut the presumption that information was used in acquiring or disposing of securities. And of course, there are also safe harbours for trading in own shares in “buy-back” programmes and stabilisation of a financial instrument3.

A maximum harmonisation provision

The Belgian Court had asked the Court of Justice to determine the level of harmonisation of the Directive and, in particular, of Article 2 thereof. This was potentially an issue in relation to an amended version of the Belgian law, which came into force after the events in question in the case, but which imposed a stricter prohibition than the Directive by removing the requirement for the use of inside information.

In the opinion delivered to the Court, Advocate General Kokott expressed the view that the extent of the harmonisation of the Directive was not something which could be answered in general terms for the Directive as a whole: each provision needed to be examined. The wording of some provisions (for example the sanctioning provisions in Article 14) made it clear that those were only minimum provisions. In considering the insider dealing prohibition, the Advocate General took into account the wording of the previous Insider Dealing Directive (which had explicitly permitted more stringent provisions) and also the spirit and purpose of the present Directive as set out in the recitals (see for example recital 11). She concluded that the prohibition on insider dealing laid down in Article 2(1) should be regarded as a maximum harmonisation provision.

The Court decided that the issue of the level of harmonisation was not relevant to the decision in the main proceedings and was therefore inadmissible. Nevertheless, given the impending review of the Directive, and the changes currently being made to the European supervisory framework for financial services, the question remains of some importance.

Those Member States whose implementing provisions go beyond mere copy-out of the provisions of the Directive, or in which regulators have issued interpretative guidance that is inconsistent with the prohibition set out in the Directive, will be giving careful consideration to the appropriateness of those provisions.

Other points of interest

Sanctions for market abuse: criminal for ECHR purposes

In delivering its judgment, the Court confirmed that sanctions imposed under the Directive may be qualified as criminal sanctions for the purpose of the application of the ECHR.

This ruling effectively disposes of arguments raised in 1999 as to whether the market abuse regime of the then Financial Services and Markets Bill would count as civil or criminal for such purposes. It confirms the need for the safeguards inserted into FSMA by HM Treasury, which now appear in section 174(2), in respect of the admissibility of statements made to investigators under compulsion of law in market abuse cases.

Sanctions for market abuse: taking account of gains realised

The Court ruled that the capacity to have a significant effect on prices must be assessed, a priori, in the light of the content of the information at issue and the context in which it occurs. The Court considered that it was not necessary to examine whether the disclosure of the information actually had a significant effect on the price of the financial instruments in question in order to determine whether information is inside information.

Nevertheless, gains realised from insider dealing are a relevant consideration in determining a sanction which is effective, proportionate and dissuasive. How those economic gains are to be calculated and the relevant dates or period to be taken into account are matters to be determined by national law.

Sanctions for market abuse: taking account of criminal penalties

Article 14(1) of the Directive states that the administrative measures or sanctions which Member States impose on persons responsible for insider dealing should be effective, proportionate and dissuasive, without prejudice to the rights of the Member States to impose criminal sanctions.

The Court found that this provision does not require competent national authorities to take into consideration the possibility of a criminal financial sanction being imposed subsequently when determining an administrative financial sanction. The assessment of the effectiveness, proportionality and dissuasive nature of the administrative sanctions laid down in the Directive could not depend on a hypothetical criminal sanction. The finding does not, however, deal with the question of how a prior criminal sanction should be taken into account – in our view the fact that a criminal sanction had already been imposed in respect of the same conduct would be something that an administrative court should take into account, in the same way that you would expect a criminal court to take into account the fact that an administrative sanction had already been imposed for the same conduct.

The interrelationship between concurrent criminal proceedings, concurrent criminal and administrative proceedings, and concurrent administrative proceedings in multiple European jurisdictions remains something of a vexed issue. Article 54 of the Schengen Convention prevent the subsequent prosecution in one contracting state of a person whose trial has been finally disposed of in another contracting state, provided that the penalty has been, is being or can no longer be enforced by the sentencing State.

Although Article 54 of the Schengen Convention aims to prevent multiple prosecutions in different jurisdictions for the same alleged criminal offence, it does not prevent conflicts of jurisdiction where parallel criminal prosecutions are ongoing in two or more Member States (but no conviction). Furthermore, its application is confined to criminal cases - at present there is no European provision that would prevent the bringing of parallel administrative market abuse enforcement cases in a multiplicity of European jurisdictions.

In the MTS case, the Belgian authorities concluded that they were prevented by Article 54 of the Schengen Convention from taking enforcement action, because the UK's regulator had already imposed a sanction dealing with, inter alia, transactions on the Belgian market. Regulators in Italy and Portugal, on the other hand, did not consider themselves similarly constrained and imposed their own sanctions. The Court's conclusion that market abuse penalties are criminal in ECHR terms (see above) provides support for the argument that the approach adopted by the Belgian regulators in the MTS case is to be preferred.

In late 2005, the European Commission consulted on the possibility of a revision of the "ne bis in idem" or "double jeopardy" rules. However, legislative proposals, originally due to be published in 2006, have been deferred indefinitely. It is possible that this issue could acquire renewed impetus in the course of the review of the Directive or through the offices of a newly empowered European Securities and Markets Authority.

Impact of the case

The European Court of Justice is the judicial authority of the European Union and, in cooperation with the courts and tribunals of the Member States, it ensures the uniform application and interpretation of European Union law. By long established principle, national courts are required to interpret national law in the light of the wording and purpose of the Directive that law aims to implement, and therefore to ensure that the results envisaged in a directive are achieved, so as far as is possible.

The decision of the Court in Spector will therefore potentially have implications for all European jurisdictions.

Belgium

Under Belgian law, insider dealing can be sanctioned:

  1. by regulatory penalties ordered by the Banking, Finance and Insurance Commission (“CBFA”) on the basis of art. 25 of the Law of 2 August 2002; or
  2. by criminal penalties imposed by the Belgian courts on the basis of art. 40 of the Law of 2 August 2002.

While the establishment of a criminal offence requires the “use” of inside information, the regulatory offence merely prohibits a person from trading if he/she is in possession of information which he/she knows (or should know) is inside information.

At the time of the trades in question, Article 25 of the Law on financial supervision, as amended by the Law of 2 August 2002, applicable to offences committed between 1 June 2003 and 31 December 2003 (‘the initial version of Article 25’), prohibited persons possessing inside information from using that information in dealing (essentially mirroring the provisions of the Directive).

However, a revised version of Article 25, applicable from 1 January 2004 was introduced by the Law of 22 December 2003 (‘the amended version of Article 25’), and provides that any person who possesses information which he knows, or ought to have known, constitutes inside information is prohibited from:

"acquiring or disposing of, or trying to acquire or dispose of, for his own account or for the account of a third party, either directly or indirectly, the financial instruments to which that information relates or connected financial instruments."

In other words, the current art. 25 of the Law of 2 August 2002 does not require that the inside information was “used” by that person; the regulatory offence will be established by the mere chronological sequence of the possession of inside information and the trade afterwards.

Several Belgian authors have already argued that the abovementioned provision is contrary to art. 2 of the Directive 2003/6/EC, which imposes a maximum harmonization. The approach of the current version of art. 25 of the Law of 2 August 2002 would be too restrictive in the light of the Directive 2003/6/EC. In this regard, the interpretation of the Directive by the Advocate General of the ECJ confirms the view of the above legal commentators.

It is possible that as a result of the Spector judgment, the Belgian legislator might decide to amend art. 25 of the Law of 2 August 2002, but we are not aware that such an initiative is being pursued at present.

France

Under French law, insider dealing can be sanctioned either by regulatory penalties ordered by the enforcement committee of the Autorité des Marchés Financiers (AMF) on the basis of the AMF Regulation ("manquement") or by criminal penalties imposed by the French courts on the basis of the Financial and Monetary Code ("délit").

However, whereas the establishment of a criminal offence (délit) requires the evidencing of the intent to use the inside information, article 622-1 of the AMF Regulation (based on Article 2(1) of the Directive) merely prohibits a person from using this information by acquiring or transferring ("utiliser cette information en acquérant ou cédant") financial instruments to which that information relates. Thus, unlike the criminal offence (délit), the regulatory offence (manquement) was conceived by the French regulator as a purely objective offence with no consideration given to intent.

This approach has been confirmed by a number of decisions from the AMF enforcement committee, which demonstrate that a regulatory offence (manquement) can be established by a mere chronological connection between the possession of inside information and its use, with no need to prove any fraudulent or speculative intention from the insider (comm. sanct. AMF, 4 Oct. 2007, Le Coadou). Thus, unless the insiders are able to provide a legitimate reason (“fait justificatif”) for entering into the transaction, the AMF enforcement committee requires them to entirely abstain from trading if they possess inside information, regardless of their intentions.

In the Spector case, by considering that acting in full knowledge of inside information qualified as “using” that information within the meaning of Article 2(1) of the Directive, the Court therefore clearly endorsed the AMF's approach to the intentional component of the regulatory offence of insider dealing (manquement d'initié).

However, it is not clear to what extent the two exceptions made by the Court to this presumption will affect the AMF’s current position. National authorities have considerable leeway in applying the Court's interpretation. This is especially true as regards limiting prohibited insider dealing to "uses of inside information" that infringe the rules set out in the Directive.

Some legal commentators have suggested that the broad approach currently taken by the AMF to insider dealing should be changed, and that going forward, the AMF enforcement committee would also need to determine whether the insider in possession of inside information has taken unfair advantage of the benefit gained from that information while avoiding exposure to the market risks borne by other investors. Given this reasoning, the Court judgment in the Spector case could encourage the AMF to adopt a more flexible position regarding the enforcement of the prohibition of insider dealing.

Germany

The German prohibition on insider dealing prohibits the use of inside information to acquire or dispose of insider securities for own account or for the account or on behalf of a third party.

The German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht "BaFin") considers this prohibition to be breached only if the inside information has contributed in some way to the decision to acquire or dispose of the insider securities. Whether or not this is the case is a matter which has to be established and demonstrated by the BaFin or the public prosecutor, as the case may be. In this regard, the interpretation of the Directive by the ECJ formally differs from the view of the BaFin.

In practice, however, the status quo in Germany would allow to handle most German cases of insider dealing in compliance with the rules set up in the Spector case. The reason is that, on the one hand, a German court must, in order to be in a position to convict a culprit, be convinced that the culprit has committed the crime, without shifting the burden of proof to the culprit. On the other hand, the Court is rather free in establishing such conviction when considering evidence. In most cases in which a person possesses inside information and trades on insider securities, it will usually not take much for the court to reach the conviction that the inside information has contributed in some way to the decision to trade the securities. For this reason, it has always been advisable for market participants possessing inside information to keep a record of the decisionmaking process in order to be able to demonstrate clearly that the trading of securities was wholly independent from the possession of inside information.

Nevertheless, it is possible that the Spector case will have more far reaching implications in Germany. The German legislature may take the view that German law does not comply with the requirements set up by the ECJ, in so far as it theoretically allows for the dismissal of a case of insider dealings in the absence of evidence that the inside information has contributed to the dealing in securities. Shifting the burden of proof to the culprit (as envisaged by the ECJ) would, however, be problematic under German constitutional law. The German legislator might, therefore, decide to entirely give up the requirement that the information must have contributed to the dealing.

The Netherlands

In line with section 2 of the Market Abuse Directive, section 5:56 of the Netherlands Financial Supervision Act prohibits any person who possesses inside information from using that information by acquiring or disposing of financial instruments to which that information relates. Legislation in force in the Netherlands before the implementation of the Market Abuse Directive provided that no person was allowed to trade while that person was in possession of inside information. Prior to implementation of the Market Abuse Directive, a 'causal link' between the possession of the inside information and the transaction was therefore not necessary for the prohibition to apply.

Following the implementation of the Market Abuse Directive, the question arose as to whether actual use of inside information must be demonstrated for the prohibition to apply, or whether this use can be assumed if and when a person enters into a transaction while possessing inside information.

In local case law, two approaches developed. The first approach adopted the regime that applied prior to implementation of the Directive: a person is not allowed to trade while in possession of inside information. The second approach, adopted by the Amsterdam Court of Appeal in the well known Landis case, is very similar to the approach adopted in the Spector judgment. If a person enters into a transaction while possessing inside information, it is presumed that the defendant made use of such inside information within the meaning of Section 2 of the Market Abuse Directive. This is a rebuttable presumption, however. The defendant can avoid enforcement measures if he can demonstrate that he did not in fact make use of the inside information he possessed.

Following the Spector judgment, we now know that this latter interpretation is the one that must prevail.

Spain

The prohibition on the use of inside information is subject to twofold regulation in Spanish legislation. On the one hand, articles 81 to 83 ter of the Spanish Stock Market Act (Ley del Mercado de Valores 24/1988) contain prohibitions, in general, on the use of inside information, as well as the exceptions to that prohibition. Specifically, article 81 of the Spanish Stock Market Act transposes into Spanish legislation the prohibitions contained in Articles 2(1) and 3 of the Directive. The regulation contained in the Spanish Stock Market Act has been implemented by Royal Decree 1333/2005 with the aim of completing the transposition of the Directive. The Spanish stock market regulator, the Comisión Nacional del Mercado de Valores, or CNMV, is responsible for ensuring compliance with the prohibition.

The Spanish Stock Market Act merely penalises the use of insider information, independently of the intent sought by the person who displayed the conduct. As in the Spector case, it is sufficient for a connection to exist between the possession of insider information and the performance of certain transactions for the CNMV to consider that there is sufficient evidence to investigate the persons implicated and, as appropriate, take the relevant disciplinary action.

The use of inside information is also classified as a criminal offence in articles 285 and 286 of the Spanish Criminal Code, and the criminal courts have jurisdiction to determine whether or not the use or disclosure of inside information constitutes a criminal offence in each specific case. The element of intent is clear in the criminal legislation, as it penalises those who use or disclose that information obtaining economic profit for themselves or for a third party or causing a loss. However, as well as this subjective element, it is worth highlighting that the criminal offence also contains a clear objective element, since the profit or loss caused by the use or disclosure of inside information must be greater than six hundred thousand euros. Conduct that would otherwise fall within the criminal provisions will be exempt from them if the resulting profit or loss does not exceed that threshold limit.

UK

The UK has implemented Article 2(1) of the Directive through 118(2) of FSMA, which provides that behaviour where an insider deals, or attempts to deal, in a qualifying investment or related investment on the basis of inside information relating to the investment in question will be. The language used is different from that in the Directive, which prevents a primary insider in possession of inside information from using that information by acquiring or disposing of, or by trying to acquire or dispose of, for his own account or for the account of a third party, either directly or indirectly, financial instruments to which that information relates.

When consulting on the amendments implementing the Directive, HM Treasury and the FSA stressed that the proposals aimed to maintain the scope of the UK’s existing regime where it was broader than that in the Directive. They acknowledged that In respect of the prohibition in s118(2) of FSMA in the (then draft) regulations on dealing or attempting to deal, the language differed from that in the Directive. The aim was to use language which was familiar in a UK context and also consistent with the prohibition in the Directive.

In approaching the interpretation of national law in the light of the wording and purpose of the Directive, the reasonable meaning of the words in the national law should not be distorted. Nevertheless, English courts will generally strive to do everything possible to ensure an interpretation that implements the directive, even if at first sight such an interpretation might appear to distort the meaning of a statute (Webb v EMO Air Cargo (UK) Ltd [1995] 4 All E.R. 577). It seems to us unlikely that the Tribunal or the Court of Appeal would conclude that section 118(2) of FSMA could not be construed in consonance with the Directive.

In practice, as a result of this decision, it seems to us that the FSA should feel more confident in bringing insider dealing cases based on circumstantial evidence, relying on the rebuttable presumption. It will now be up to the defence to prove that the information was not the basis of the trade or attempted trade, rather than for the FSA to establish that it was.

However, to the extent that the market abuse regime under FSMA uses the general word “behaviour” when defining what constitutes market abuse, the range of activities caught under Part 8 is potentially wider than that under the Directive, which is more specific, and refers to “transactions or orders to trade”. Furthermore, section 118(4) prohibits behaviour (not covered by the offences drawn from the Directive) in relation to relevant information not generally available, subject to the ‘regular user test’. If it is correct to say that the provisions of Article 2(1) of the Directive are maximum harmonisation provisions, then there may be a need to reconsider the formulation of the UK provisions. There may also be a need to revisit some of the guidance in MAR 1.3, particularly the guidance relating to trading information, in the light of the ECJ's purposive interpretation.

HM Treasury and the FSA, who are reviewing the implications of the judgment, have said that they will bring forward amendments to the relevant provisions in due course if this is necessary to bring the UK market abuse regime into line with the judgment. The need to prove a subjective mental element in a criminal prosecution for insider dealing under the Criminal Justice Act 1993 should remain unaffected by this decision.