Sharp fall in reports on suspected insider trading in Finland over the current year

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The number of reports on suspected insider trading have fallen steeply, in spite of the fact that the Finnish Securities Market Act regarding insider trading was tightened in the summer of 2005, as a consequence of a new EU directive on stock market irregularities.
      Simultaneously, the number of reports on suspected insider trading in Sweden has increased rapidly.
      In Sweden, the numbers of suspected insider transactions reported by stockbrokers as well as by the stock exchange have been five times higher than in Finland in the course of the current year, even though the number of listed companies on the Stockholm Stock Exchange is only double that on the Helsinki Exchange.
     
Director General of the Finnish Financial Supervision Authority (RATA) Anneli Tuominen cannot explain the difference in the number of reports in Finland and Sweden, while Swedish colleagues say that it is the fear of penalty that counts.
      In Sweden, failure to file a report is regarded as a criminal offence, while in Finland such negligence may result in an admonition in the worst case.
      In Sweden, a failure to report on a suspected insider transaction has already led to legal proceedings in three cases.
      RATA in Finland is investigating a couple of cases in which a suspected insider transaction has clearly not been reported. Moreover, RATA’s attention has been drawn to certain stockbroker agencies with no reports on suspected inider trading.
      "Such differences between agencies do not sound natural", notes Anneli Tuominen from RATA.
     
The Swedish equivalent of RATA, Finansinspektionen, noticed that the number of reports increased after the media had started to write about the topic.
      Peter Nylén from Finansinspektion says that there is a reason to file a report on suspected insider trading, if a client tells his or her stockbroker that something will happen at a certain company soon, which is why he or she wants to buy or sell a large block of that company’s shares.
      In another typical case a client’s behaviour changes unexpectedly. After having owned the standard Volvo and Ericsson stock portfolio for a number of years, the client suddenly wants to sell everything and buy shares in a small unknown company.
     
In Sweden a report is often filed without any accurate knowledge of insider trading. The Swedish stock market controllers become suspicious immediately if a share price starts going up for instance on the eve of a company’s public announcement of its financial results.
      Swedish stock market controllers are stricter with the rules relating to insider trading than their Finnish colleagues are.
      "Given a choice, I would prefer the Swedish style", commented Jarmo Leppiniemi, the professor in accounting at the Helsinki School of Economics. Leppiniemi is also the chairman of the Finnish Shareholders' Association.
     
Insider trading is the trading of a public company’s stock or other securities by the company’s officers, directors, and beneficial owners based on non-public information.
      Insider trading is regarded as illegal as it can affect the company’s share price. In fact anybody who takes advantage of such non-public information is guilty of insider trading, and companies should provide registers of all insiders, whether actually employed by the company itself or not.


Previously in HS International Edition:
  COMMENTARY: Matti Vanhanen - an insider for the nation? (6.11.2007)
  Former managers of Jippii acquitted on insider trading charges (1.11.2007)
  No insider trading charges against Kone CEO (3.2.2006)

Links:
  The Finnish Financial Supervision Authority (RATA)

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