The FSA amended the Code of Market Conduct (MAR 1) with effect from 6 March 2011 to delete the evidential provision relating to a person's intention to commit market abuse by using inside information. The change is significant as it reverses the burden of proof in market abuse cases. It will now be up to the defence to prove that the inside information was not the basis of the trade or attempted trade, rather than for the FSA to establish that it was.
The change follows the European Court of Justice judgment in the Spector Photo case in January 2010 (Spector Photo Group and Van Raemdonck v Commissie voor het Bank-, Financie- en Assurantiewezen (CBFA) (Case C-45/08)). The ECJ held that if a person deals while in possession of inside information, there will be a rebuttable presumption that the inside information was used.
In light of the ECJ's decision, the FSA has deleted MAR 1.3.4 which set out the FSA's opinion that if any inside information was the reason for, or a material influence on, the decision to deal, this indicates that the person’s behaviour is "on the basis of" inside information. This evidential provision suggests that, in order to prove insider dealing, the FSA would need evidence of a person's intention. The FSA decided that MAR 1.3.4 should be deleted as, following the Spector Photo case, it is not necessary to provide evidence of a person’s intention in order to prove insider dealing.
The amending instrument in available in Handbook Notice 107 on the FSA website.