On 5 July 2011, the Supreme Court issued a number of decisions on the prohibition on insider trading.
Intent of the instigator (Landis)
In the first case, the defendant was fined as he instigated the insider trading by two other parties by providing information on a contemplated private placement of Landis shares in 2001. At that time, the defendant was chairman of the board of directors of Landis and had requested the two other parties to buy Landis shares at a certain price. The Supreme Court upheld the decision of the Amsterdam Court of Appeal that the defendant was guilty of intentionally instigating insider trading, albeit that the fine and the term of the imprisonment in case of non-payment of the fine were reduced in view of the length of the proceedings.
For instigation to exist, the instigator must have intent with regard to both the criminal act and the instigating conduct. In sum, the Supreme Court rejected the argument of the defendant that there was no intent present as he could not know that the information was undisclosed and price-sensitive, ruling that the intent of the instigator does not have to be directed at these elements. Furthermore, the Supreme Court confirmed that it is not required that a financial or any other direct or indirect advantage is gained for the use of price-sensitive information to constitute a criminal offence. As to the causality between the price-sensitive information and the transaction, the Supreme Court ruled that causality exists when a defendant had price-sensitive information at the moment that he executed or secured the transaction.
In this case, two directors of Veer Palthe Voûte ("VPV"), a private bank and asset management firm, were fined for making unlawful use of inside information. In 1999 the two directors of VPV had the intention of making a public offer on all shares of a number of listed holding companies. Before the offer could be made, the directors needed to reach a settlement agreement with the Dutch Ministry of Finance regarding some outstanding tax claims on the targeted holding companies. Negotiations took place from May to December 1999, when a final agreement was reached. The two directors of VPV continued trading in the targeted securities throughout the negotiating process, even after September 1999 when the outline of an agreement was well in sight.
The main question in the subsequent court case initiated by the AFM was whether the information of the directors about the acquisition plan, i.e. the stage of the negotiations with the tax authorities, at the time of the trading qualifies as inside information. According to the Amsterdam Court of Appeal, this was indeed the case. The Court of Appeal ruled that the negotiations with the Dutch Ministry of Finance had, as early as 17 September 1999, reached such an advanced stage that the outlines of a settlement were visible and if this information had been disclosed it would have been foreseeable that this would have affected the price of the relevant shares.
Furthermore, the Amsterdam Court of Appeal ruled that for “making use of inside information” to be legally demonstrated, it is sufficient that the accused party has performed a transaction while having inside information at that time. In this, a causal link between the performance of the transaction and the inside information is not required. The decision of the Amsterdam Court of Appeal was upheld by the Supreme Court, albeit that the fines were reduced to EUR 60,750 and EUR 33,750, respectively, in view of the length of the proceedings.