The Criminal Liability of Securities Dealers for Aiding and Abetting Their Customers’ Market Abuse According to EU Law
Posted: 17 Sep 2019 Last revised: 24 Sep 2019
Date Written: September 17, 2019
On 14 August 2019, The Danish FSA issued a guidance No. 9727 on the criminal liability of securities dealers for aiding and abetting a customer’s violation of the prohibitions on market abuse in MAR, notably insider dealing and market manipulation. The guidance declares that the mere execution of the customer’s order constitutes aiding and abetting according to Danish criminal law and is thus a criminal offence punishable as market abuse. It is argued that this is incorrect and that only activity beyond mere execution will suffice as aiding and abetting. The argument is partly based on Danish law, partly on MAR, where especially the obligation on dealers to report any suspicious activity by their customers in MAR Art 16 suggest that the mere execution by them of such orders cannot be illegal in itself as the reporting obligation would be contrary to the ban on self-incrimination that follows from human rights law. This understanding is further supported by recitals 30 and 39 and complements MAR Art 9, section 2, litra b. It is further criticised that the FSA issues guidance as a level 3 instrument on matters of criminal law that are uncertain and potentially wrong as it will seriously disrupt the business of securities dealers and it is recommended that the guidance is withdrawn or modified.
Note: The paper is published in Danish in the next issue No. 3 of Nordisk Tidsskrift for Selskabsret, the pan-Nordic company law journal published by DJØF Publishing in Copenhagen and distributed to the five Nordic countries.
JEL Classification: K22
Suggested Citation: Suggested Citation