What Constitutes Insider Dealing? - The Advocate General's Opinion in Case C-45/08, Spector Photo Group
International and Comparative Corporate Law Journal, Forthcoming
14 Pages Posted: 4 Nov 2009
Date Written: November 3, 2009
There is considerable interest in the Spector Photo Group case, as it will allow the EC Court of Justice to establish what constitutes insider dealing. The Advocate General’s opinion is helpful as it correctly points out that use of the inside information is a necessary condition for infringing the prohibition on insider dealing and that a transaction carried out while in possession of inside information would generally constitute insider dealing, but it does not fully analyse what constitutes ‘use’ and thus leaves a few important questions unexplored. This paper provides an answer on the basis of a definition of inside information as ‘an informational advantage vis-à-vis other possible trading partners’. It is argued that the requirement of use of inside information involves a person actively trying to obtain the advantage that the inside information represents, irrespective of whether any gain is actually achieved. Consequently, when no such advantage is sought, for example because there is parity of information between the parties, or the informed party reflects the inside information in the conditions of the transaction, or the transaction is based on conditions agreed before the inside information arises, the prohibition of insider dealing is not infringed.
Keywords: EU-law, securities regulation, market abuse, insider dealing
JEL Classification: K22
Suggested Citation: Suggested Citation