Criminal sanctions for insider dealing?

European justice ministers meeting in the Council of the European Union last week reached agreement on proposals for a Directive on insider dealing and market manipulation that will criminalise such behaviour.

Insider dealing occurs when a person who has price-sensitive inside information trades in related financial instruments. Market manipulation takes place when a person artificially manipulates the prices of financial instruments through practices such as the spreading of false or misleading information and conducting trades in related instruments to profit from this.

Together these practices are known as market abuse.

"Market abuse is not a victimless offence,” said Vice-President Viviane Reding, the EU's Justice Commissioner. “It is a major problem for confidence in our financial systems and we need to address it. With our proposals we want to close any possible regulatory loopholes. There must be zero tolerance for manipulators in the EU financial markets.”

“The text as agreed by ministers is a good basis for starting negotiations with the European Parliament,” she added. “I am confident that this proposal can now be swiftly adopted so we can show clearly that we are serious about fighting market abuse and in protecting the integrity of our markets in the interest of our citizens."