The Inside Information Regime of the MAR andthe Rise of the ESG Era

The rise in ESG investing has been characterized as an “investor revolution” and a manifestation of “social change”. The current coronavirus pandemic will arguably intensify the impact of such social change, with the “S” and “G” components of ESG, in particular, having been brought into sharper focus during the crisis. The issue of the extent to which ESG factors are (currently) of considerable importance – and, in particular, are likely to become even more so in the future – for the performance of share prices remains a highly controversial one in financial economics. However, where an empirically substantiated impact of ESG-related information on the prices of financial instruments can be shown, the question of whether such information is also of relevance to the inside information regime of the Market Abuse Regulation (“MAR”) arises and must be answered. This article explores the potential impact of ESG-related information and an increase in ESG-compliant investments on the prohibition on insider dealing and the obligation to publicly disclose inside information. We believe that the ESG preferences of a critical mass of real-life investors and, as a corollary, ESG-related information, are and will continue to be of great importance to the inside information regime. However, the intense debate regarding the precise depiction of the ‘reasonable investor’ within the meaning of Art. 7 MAR indicates that the relevance of ESG-related information to the inside information regime of the MAR is by no means clear. In light of these uncertainties, and given its efforts to promote sustainable finance, the EU legislature would be well advised to further specify the concept of inside information with a particular focus on ESG-related information.

Part II UK Securities Markets, 5 UK Listing, Prospectus, and Disclosure Regime

This chapter talks about the current UK listing regime that stems from the EU legislation that was enacted as part of the European Commission's action plan for the Capital Markets Union (CMU) and Financial Services Action Plan (FSAP). It describes the aims of the CMU and the FSAP in order to achieve a single financial services market with no obstacles to cross—border activity and a sound supervisory structure. It also highlights the key EU legislation that governs the UK listing regime, which includes the prospectus regulation that regulates the prospectus to be published when a company's securities are to be offered to the public or admitted to trading on a regulated market in the European Economic Area (EEA). This chapter discusses the Market Abuse Regulation (MAR), which covers the disclosure and control of inside information and the offences of market manipulation and insider dealing. It also mentions the Transparency Directive that harmonizes transparency requirements for issuers whose securities are admitted to trading on a regulated market.

12. Market abuse

This chapter deals with abuses committed in the trading of shares, with particular reference to insider dealing and market manipulation, and the laws intended to control them. The chapter considers forms of control to prevent market abuse under three key pieces of legislation: Regulation (EU) No 596/2014, the Criminal Justice Act 1993 and the Financial Services Act 2012. It looks at regulations governing disclosure to regulated markets and the fiduciary duty of directors, and offences involving insider dealing and creating a false market. The chapter analyses a particularly significant case: Percival v Wright [1902] 2 Ch 421.

Die Nutzung einer Insiderinformation und legitime Handlungen

This study is the first monograph in Europe to analyse the criterion of ‘use’ of inside information and the corresponding legitimate behaviour (Article 9 MAR) under the Market Abuse Regulation. The innovative thesis develops a three-stage examination for determining ‘use’, which is further substantiated by case groups. This systematization enables a legally secure, dogmatically consolidated and economically justified distinction between prohibited ‘use’ of inside information and legitimate behaviour. The in-depth analysis of the intervention of the insider dealing prohibition in various M&A transactions, especially in the case of public takeovers, is likely to be of particular interest to practitioners.

5. Raising capital: equity and its consequences

Titles in the Core Text series take the reader straight to the heart of the subject, providing focused, concise, and reliable guides for students at all levels. This chapter focuses on raising equity from the general public and its consequences for the operation of the company. It begins by outlining the basics of raising equity before turning to the consequences of operating in a public market, with emphasis on areas such as takeovers and insider dealing. It then considers the distinction between public and private companies in terms of capital raising, how such companies are regulated, and how public companies differ from listed companies. It also discusses various methods of raising money from the public, the role of the Financial Conduct Authority and the London Stock Exchange in ensuring the proper functioning of the listed market in the UK, and the regulation of listed companies as well as takeovers and other public offers.

Controlling insider dealing through criminal enforcement in China

Purpose The purpose of this paper is to review the criminal enforcement of insider dealing cases in People's Republic of China's (PRC) securities market and to provide feasible suggestions for improvement for a more coherent and streamlined insider dealing regulatory framework in the PRC during the enforcement of China's new Securities Law (SL 2020) in March 2020. Design/methodology/approach Through analysing the previous literature on public interest theories and economic theories of regulation, this paper examines the necessity to regulate insider dealing in China with criminal law to ensure fairness and avoid monopolies in its securities market. The paper reviews the criminalising of severe insider dealing cases in China from the Nanking National Government in the 1920s to the inception of the securities market of the PRC in the 1990s to the present day. The investigation, prosecution, enforcement and trial of criminal offences of insider dealing in China are thoroughly examined. Findings The paper finds a tendency for over reliance on the investigation and the administrative judgement of the China Securities Regulatory Commission in criminal investigation, prosecution and trial in the PRC. Originality/value To the best of the authors’ knowledge, this paper is one of the first papers to critically and thoroughly analyse the criminal enforcement of insider dealing in China following the recent enforcement of China’s new Securities Law in March 2020.

5 Market Abuse

This chapter assesses market abuse. Market abuse offences, in all of their possible forms, frustrate the concept of market efficiency by allowing undue advantage to the individuals performing the abusive actions, thus jeopardizing the development of fair and orderly markets. In turn, this is likely to harm confidence by undermining investors' beliefs that the market is fair, leading them to withdraw their investments. In Europe, the first European-wide legislative package was initiated with the adoption of the Market Abuse Directive in 2003 (Directive 2003/6/EC), with the aim of providing a broad framework that would address market manipulation and insider dealing practices in the EU. However, in the aftermath of the Financial Crisis in 2008, a review of the regime was required as a number of deficiencies were found. In 2011 and in order to address these issues, the European Commission adopted the proposal for the Regulation on insider dealing and market manipulation (MAR) as well as the Directive on Criminal Sanctions for Insider Dealing and Market Manipulation (CSMAD).