Financial Crime World

Finnish Financial Supervisory Authority Cracks Down on Insider Trading: Recent Judgments and Prevention Measures

The Finnish Financial Supervision Authority (FIN-FSA) has taken a firm stance against insider trading and unlawful disclosure of inside information, launching numerous investigations in recent years. Here’s what you need to know:

Recent Judgments and Penalties

  • The FIN-FSA has investigated several cases of insider trading, with penalties ranging from 75 day-fines to nine months of conditional imprisonment. (Source: FIN-FSA)
  • The ill-gotten proceeds have been ordered forfeited to the state. (Source: FIN-FSA)

Trading Guidelines for Insiders

Insiders of listed companies are encouraged to adhere to the following 10 trading guidelines provided by the FIN-FSA:

  1. Trade only through institutional intermediaries, such as investment firms, securities companies, or banks.
  2. Do not trade based on inside information.
  3. Do not disclose inside information to anyone unless obligated to do so by law.
  4. Consult legal counsel if uncertain whether information is inside information.
  5. Disclose your holdings to the issuer and the public as required by law.
  6. Plan your trading activities in advance, so you do not have to make trading decisions under pressure.
  7. Make your trading decisions on the basis of publicly available information.
  8. Consider how your trading may be perceived by the public.
  9. Maintain an orderly market by ensuring that your trading does not cause significant price fluctuations.
  10. Keep accurate records of your transactions.

Prohibitions on Inside Information

The prohibitions on inside information apply to all market participants, not just insiders. The consequences of violating these restrictions include:

  • Exploiting the market’s trust and gaining an unfair advantage
  • Undermining confidence in a level playing field and the impartiality of the market
  • Penalties ranging from up to two years’ imprisonment for abuse or disclosure, and up to four years’ imprisonment for aggravated abuse. (Source: Penal Code)

Monitoring and Reporting Suspicious Transactions

The fight against insider trading is a collaborative effort between various parties. Surveillance systems, such as trading surveillance systems, are used for monitoring trading activities. Market participants, including investment service providers, have a responsibility to report any suspicious transactions or orders they observe to the FIN-FSA.

  • The FIN-FSA receives approximately 150-200 notifications annually. (Source: FIN-FSA)

Insider Information and the Market Abuse Regulation (MAR)

Under MAR, inside information is precise, significant, and unpublished information relating to an issuer or a financial instrument, likely to have a significant impact on the price of the financial instrument or the related derivative if made public. These prohibitions are in place to:

  1. Maintain fair play in securities markets
  2. Protect investors and maintain the integrity of the financial system.

Anyone in possession of inside information must not disclose it to another party without an acceptable reason or use or advise others to use it, regardless of how it was obtained.