insider tradingNASDAQ OMX FIRST NORTH | MAR | FCA

presented by yang yen thaw

abbreviations

• NASDAQ – NASDAQ OMX First North, Sweden

• MAR – Market Abuse Regulations, EU

• FCA – Financial Conduct Authority, UK

• PDMR – Person Discharging Managerial Responsibilities

• ESMA – European Securities and Markets Authority

legal and regulatory frameworkEU, Sweden, UK

applicable regulations

• NASDAQ OMX First North Stockholm Rulebook

• Market Abuse Regulations, EU

• Directives, EU

• FCA Regulations, UK

• Relation with Nasdaq through Certified Adviser

The Rulebook refers to the MAR wherein national law of member states (FCA for UK) are also referred to. The following slides discuss MAR

market abuse regulationsEU

regulatory authority

ESMA – European Securities and Markets Authority

Administrative authority by Member State

Application of national law

Power to supervise and investigate

what is insider information

• Non-public Information that may effect share price

• Set of circumstances, present and future

• Intermediate steps

• MAR / Directive 2014/65/EU

- Financial instruments include transferable securities

person possessing inside information

who is an insider

who is a PDMR

• member of the administrative, management or supervisory body of the Issuer

• senior executive with access to inside information and managerial decisions powers

• persons closely associated also involved along with PDMR (also Related Parties)

• PDMR actions to be notified (local regulator or under national law)

who is closely associated / related party

• a spouse, or a partner considered to be equivalent to a spouse in accordance with national law;

• a dependent child, in accordance with national law;

• a relative who has shared the same household for at least one year on the date of the transaction concerned; or

• a legal person, trust or partnership, the managerial responsibilities of which are discharged by a person discharging managerial responsibilities or by a person referred to in point (a), (b) or (c), which is directly or indirectly controlled by such a person, which is set up for the benefit of such a person, or the economic interests of which are substantially equivalent to those of such a person

PDMR duties

• No transactions during closed period of 30 calendar days before theannouncement of an interim financial report or a year-end reportwhich the issuer is obliged to make public

• Minimum threshold for notification of dealings above €5,000 is 3-daytime limit

• PDMRs to be notified of their obligations under MAR and notificationpassed on by PDMRs to all persons closely associated with them

insider dealing

You are an insider dealer if you are deal in shares while in possession of insider information as a result of:

• Being a member of the administrative, management or supervisory bodies of the issuer

• Having a holding in the capital of the issuer

• Having access to the information through the exercise of an employment, profession or duties

• Being involved in criminal activities

legitimate behaviour

• Established, implemented and maintained adequate and effective internal arrangements and procedures for use of inside information

• Not encouraged, made a recommendation to, induced or otherwise influenced decision on the relevant shares

• Market maker – authorised person, for purpose of acquisitions

• In the course of employment, profession or duties with authorization

• Legal and regulatory obligation arising out of an agreement

• Self acquired knowledge

prohibition and unlawful disclosure

A person shall not:

• engage or attempt to engage in insider dealing;

• recommend that another person engage in insider dealing or induce another person to engage in insider dealing; or

• unlawfully disclose inside information.

non-disclosure of inside information

• Market sounding

for gauging interest of potential investors (consent required)

• Market manipulation

false and misleading signals; abnormal price or artificial level

exemptions & exceptions

• Security of Member State

• Adverse effect to investigation

• Parallel actions by Member State

• Final judgement in Member State

• Buy back by Issuer subject to conditions

• Company suffers severe financial difficulty, which require the immediate sale of shares

• Employee share or saving scheme, qualification or entitlement of shares

MAR & BREXIT

• UK relationship with EU under negotiation

• EU market access will still require MAR compliance

• Matters pertinent will be Market Soundings, PDMRs, Disclosure norms, Insider regulations

• At worst, parallel regulations in place

penalties

• Cease and desist

• Disgorgement of the profits gained or losses avoided due to the infringement

• Public warning

• Withdrawal or suspension

• Temporary ban on PDMR/s

• Maximum administrative pecuniary sanctions of at least three times the amount of the profits gained or losses avoided because of the infringement

• Maximum administrative pecuniary sanctions ranging from €500,000 to €15,000,000

• Publication of decisions

financial control authority

• FCA is the financial regulatory body in the United Kingdom, which regulatesfinancial firms providing services to consumers and maintains the integrity of theUK’s financial markets

• FCA has significant powers, including the power to regulate conduct related tothe marketing of financial products. It is able to specify minimum standards andto place requirements on products, and has the power to investigateorganisations and individuals

• FCA is able to ban financial products for up to a year while considering anindefinite ban; it will have the power to instruct firms to immediately retract ormodify promotions which it finds to be misleading, and to publish such decisions

myths & truths

myths• Only a company’s officers or

directors can commit insider trading

• You need to trade and be caught in the act

truths• The law applies to anyone who

knows material non-public information at the time of the trade or tip

• It applies to stock of customers, suppliers, merger partners

• Tipping, even if the tipper does not trade, will be illegal

• Most cases are based on circumstantial evidence

insider trading practice

• Adopt or enhance flexible comprehensive training programs thatseeks to monitor risks

• Familiarity with their compliance roles and responsibilities,particularly with respect to the handling and sharing of material non-public or “price sensitive” information

• Conduct judged as well as the internal mechanisms to report anycompliance concerns or potential violations

• Training on internal ethics, hotlines and development of relationshipwith regulatory bodies

things to do

• Do not disclose without thinking!

• Disclosure in accordance with MAR

• Maintain insider list

• PDMR actions to be notified (local regulator or under national law)

• FURTHER STRINGENT INTERNAL PROCESSES & SYSTEMS COMING IN PLACE SOON!

case studies• Steven McClatchey case

• F Michael J Maciocio case

• Martyn Dodgson (UK) case

steven mcClatchey case

• Steven McClatchey was an Investment banker in New York and was charged under SEC Rule 105-b for allegedly tipping non-public information to his plumber friend, Gary Pusey, who then used the misappropriated non-public information to purchase securities in 10 companies before their acquisitions were announced publicly, enabling him to generate $76,000 in illicit trading profits. In return Pusey provided free bathroom remodelling for McClatchey

michael j maciocio case

• Michael J Maciocio was charged for illegally tipping his childhood friend, stockbroker David P. Hobson, who made $187,000 in illicit trading profits for himself and $145,000 for his customers.

• Maciocio also obtained confidential clinical and business data about other pharmaceutical firms being considered by his company for potential acquisitions and business relationships, and he used the nonpublic information to trade in their stocks. Maciocio made approximately $116,000 in illegal profits

martyn dodgson - UK case

• Martyn Dodgson, a corporate broker and Andrew Hind, an accountant was accused of making $10.7million from illegally trading stocks.

• Apparently, Dodgson was working at Lehman and fed tips on the takeovers of Scottish & Newcastle Ltd. and mortgage provider Paragon Group of Companies Plc to Hind, who passed them to Parviziand Anderson to trade on

other famous cases

• Martha Stewart

• Raj Rajaratnam – Goldman Sachs

Thank you!The Marketing Group plc