Indeed, if the inside information is disclosed during a presentation, it could be that that information has lost all or part of its non-public nature. Whether the duty to disclose the inside information can still be based on Article 17(1) MAR depends on the circumstances following the selective disclosure. However, in our example, the issuer must still make complete disclosure of the inside information pursuant to Article 17(8) MAR, because the chairman selectively disclosed (part of the) inside information in the normal course of his employment, profession or duties. After all, the issuer did not comply, or at least not in the appropriate manner, with its primary duty to disclose the inside information. If the issuer has not opted to delay the disclosure of the inside information, an infringement of Article 17(1) MAR occurs. Imagine, for example, that an issuer’s chairman accidentally (partly) discloses inside information during a presentation given at the annual shareholder meeting and that the attendees owe no duty of confidentiality. Īlthough Article 17(8) MAR is derived from a legal system with its own distinct disclosure regime, we believe that this provision also has its independent status in the European legal system. From this point of view, it has even been advocated that Article 17(8) MAR should be deleted entirely. federal law, it has been argued that copying Section Reg FD into the European legal framework has the undesirable effect of (unjustly) granting issuers a second chance to disclose inside information. Partly based on the fact that a continuous duty to disclose inside information is absent under U.S. In the U.S., information regarding the issuer was frequently first shared with investment analysts before it was made publicly available. Article 17(8) MAR is the European counterpart to Section 243.100 of Regulation FD (“Reg FD”). Selective disclosures include, for example, the sharing of information with (major) shareholders during a shareholder meeting and the sharing of information with investment analysts. Selective Disclosure of Inside InformationĪrticle 17(8) MAR stipulates that an issuer must make complete and effective public disclosure of any inside information shared with any third party by that issuer in the course of its business or by a person acting on behalf or for the account of that issuer in the normal course of the exercise of his employment, profession or duties (“selective disclosure”), unless this third party owes a duty of confidentiality. A subsidiary objective of the duty to disclose inside information is that all relevant information is made available to the investing public as soon as possible, which increases market transparency and, ultimately, improves the efficiency of the price formation process. The main purpose of Paragraph 1 is to prevent insider dealing by putting investors on an equal footing and, hence, to reduce the risk of insider dealing. Hence, Paragraph 1 contains a continuous duty for issuers to disclose inside information. Article 17(1) MAR contains the primary duty to disclose inside information, which, in short, stipulates that the issuer in question must disclose inside information that directly concerns that issuer as soon as possible. Legal Framework and Rationale for the Duty to Disclose Inside InformationĪccording to Article 7(1) MAR, inside information is of a precise nature, has not been made public, relates directly or indirectly to one or more issuers or to one or more financial instruments, and would, if it were made public, be likely to have a significant effect on the prices of those financial instruments or on the price of related derivative financial instruments. In our paper we defend the independent status of these legal provisions by focusing on their function of serving legal certainty. Similar doubts could be raised over Article 17(7) MAR. Commentators have raised doubts over the necessity and function of Article 17(8) MAR. Separate disclosure duties have been included in Article 17(8) and Article 17(7) MAR for, respectively, the two situations referred to above. The issuer’s primary duty to disclose inside information follows from Article 17(1) MAR. The requirements of the public disclosure of inside information are set out in Article 17 of the Market Abuse Regulation (MAR). In particular, we try to find an answer to the question of which duties of the disclosure regime have been violated in two situations: where i) inside information is selectively disclosed to third parties and ii) the confidential nature of the inside information is no longer ensured if the disclosure of that information has been delayed. In our recent paper we discuss the European regime governing the disclosure of inside information.
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