General Regulation of the French Financial Markets Authority (AMF), information is considered inside information if it meets the following four cumulative criteria:

• It is non-public;
• It is precise;
• It relates directly or indirectly to an issuer or a financial instrument;
• If made public, it would be likely to have a significant effect on the price of the related financial instruments.

To prevent any violation of market abuse rules, persons in possession of inside information must strictly observe the following:

1. Obligation to Refrain from Trading

They must refrain from buying, selling or attempting to trade financial instruments related to the inside information as long as such information remains non-public.

2. Obligation of Non-Disclosure

Inside information may only be disclosed to third parties within the strict limits of the normal exercise of professional duties. Any intentional or unjustified disclosure is prohibited.

3. Heightened Vigilance Requirement

Persons in sensitive positions (executives, board members, employees with privileged access) must:

• Be listed in the issuer’s insider list;
• Declare their own transactions (under the MAR regime for managers’ transactions – Article 19 MAR).

1. CRIMINAL SANCTIONS (France)

According to Article L. 465-1 of the French Monetary and Financial Code:

a) For persons who obtained the information in a professional capacity or as company officers:

• Imprisonment: 2 years;
• Fine: up to EUR 1.5 million (may be increased up to ten times the amount of the profit made, and not less than the profit itself

b) For any other person acting with knowledge of the inside information:

• Imprisonment: 1 year;
• Fine: EUR 150,000 (also increased under the same terms as above).

c) If the information relates to a crime or offence:

• Imprisonment: up to 7 years;
• Fine: EUR 1.5 million minimum if profits are lower than that amount.

d) In case of dissemination of false or misleading information:

Same penalties as above (2 years and EUR 1.5 million fine).

e) Handling (Recel) of Inside Information:

Anyone who knowingly uses inside information obtained illicitly can be punished, even if the identity of the original insider is unknown.

2. ADMINISTRATIVE SANCTIONS (AMF)

The Enforcement Committee of the Autorité des marchés financiers (AMF) may impose:

• Financial penalties of up to:
• EUR 100 million for legal entities; or
• Ten times the amount of the gain made;
• Temporary or permanent bans from performing certain professional activities.

AMF procedures are independent from criminal proceedings but may run in parallel.

Regulation (EU) No. 596/2014 of the European Parliament and of the Council of 16 April 2014 (the Market Abuse Regulation – MAR) is directly applicable in all Member States. It governs:

• The definition of insider trading;
• Disclosure obligations for issuers;
• Administrative sanctions;
• The role of national competent authorities (in France: the AMF).

Listed issuers are required to:

• Maintain insider lists;
• Promptly disclose any inside information to the public, unless the publication is lawfully delayed;
• Declare transactions carried out by their managers.

Legal References

• French Monetary and Financial Code: Articles L. 465-1 to L. 465-4, L. 621-15
• Regulation (EU) No. 596/2014 (MAR): Articles 7 to 30
• AMF General Regulation: Articles 622-1 to 622-3
• French Penal Code: handling of proceeds of crime (Article 321-1)

Disclaimer

This note was prepared by the law firm JACQUES ELIE LEVY AVOCAT for general informational purposes only. It does not constitute legal advice or a legal consultation within the meaning of French Law No. 71-1130 of 31 December 1971. The information contained herein reflects the state of the law at the date of publication and may be subject to change. It cannot replace a case-by-case analysis of each individual situation. The firm shall not be held liable for any decisions taken solely on the basis of this note. JACQUES ELIE LEVY AVOCAT remains available to the reader to review, if necessary, the specific legal issue at hand and provide appropriate guidance or assistance.

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