Proposal for tougher measures against violators of stock exchange rules
Violations of insider trading rules and other improprieties in securities trading could lead to more severe monetary penalties than before.
Proposed legislation drafted by the ministry of Finance calls for harsher penalties to be imposed by the Financial Supervision Authority. The ministry also proposes a lower threshold for punishing violators.
At present, the maximum penalty is EUR 10,000 for private individuals and EUR 200,000 for companies. In the proposal the maximum punishment for a private individual would rise to EUR 100,000, and a penalty for a company that violates the trading rules could rise to 10 per cent of the company’s turnover, with a maximum of EUR 10 million.
The punishment for minor violations will rise tenfold to EUR 10,000 for private individuals and EUR 100,000 for companies.
The draft legislation also proposes that the Financial Supervision Authority could impose a fine for a broader range of violations than before.
Another proposal is that the authority should make more use of the power that it has. Even though the authority has had the right to punish severe violators since 2005, it has never done so. Last year, it ordered the payment of five fines for minor offences.
The draft would require the Financial Supervision Authority to impose a penalty whenever it considers that a violation has taken place. Under present legislation the authority can do so, but it can also choose not to.
Ministry of Finance official Janne Häyrynen notes that the authority has not used its powers to impose financial penalties very often. One reason for this is that serious economic crimes are subject to criminal prosecution in any case.
Häyryen says that there are two key reasons to increase the penalties. “In Finland administrative sanctions have traditionally been at a low level compared with other European countries”, he says.
Second, there are a number of proposals for new rules in the EU in which even tougher sanctions are being considered, with an upper limit of EUR 5 million for administrative penalties for private individuals.
Another innovation is the obligation that is placed on the Financial Supervision Authority to work more closely with other officials.
The authority would be required to ask for a police investigation if it suspects that a crime may have been committed. Borderline cases are to be evaluated with the police and prosecutors.
“In practice, there already is cooperation with the Financial Supervision Authority. It would clarify things if the obligation were included in the law”, says criminal inspector Ilkka Koskimäki of the economic crimes unit of the Helsinki Police.
The draft is part of an overall reform of securities legislation. It was originally to have taken effect in July, but because of delays it is not expected to take effect before the autumn.
Financial Supervision Authority