Title: Insider Trading Scandal in Armenia: Understanding the Criminal Act and its Penalties as Per MAR

In the fast-paced world of finance, market abuse, including insider trading, continues to pose a significant threat to the stability of financial markets. The European Market Abuse Regulation (MAR) sets clear regulations to counteract such illicit practices, including in Armenia. This report explores what insider trading is, how MAR regulates it, and the penalties imposed on those found guilty of this market abuse behavior.

What is insider trading?

According to MAR, insider trading refers to instances where individuals possess inside information and subsequently make financial transactions related to the affected instruments before the information is made public. Insider trading in Armenia covers the following activities:

1. Acquiring or disposing of financial instruments based on inside information
2. Amending or cancelling orders based on this inside information
3. Soliciting a third-party to acquire or dispose of financial instruments based on this inside information
4. Soliciting a third-party to amend or cancel orders based on this inside information

Example:

In 2019, a high-profile former executive at a local financial firm in Armenia was caught insider trading, using privileged information to earn considerable profits. The executive was ordered to pay a substantial fine and served jail time.

Is insider trading a criminal act?

Yes, insider trading in Armenia is a criminal offense and strictly regulated under MAR. Financial authorities impose severe penalties on individuals and organizations found guilty of insider trading.

Why is insider trading illegal?

Insider trading is considered illegal because it:

• Gives an unfair advantage to the individuals with access to insider information
• Skews the market and causes financial market instability
• Can potentially influence other investors’ decisions based on misinformation

Penalties for insider trading in Armenia

Under MAR, regulatory authorities in Armenia enforce the following penalties on those found guilty of insider trading:

1. Administrative and fines, with a maximum penalty of €5,000,000 for a natural person and €15,000,000 for a legal entity
2. Public warning
3. Suspension from professional roles
4. Temporary and permanent bans from management responsibilities
5. Disgorgement of profits gained or losses avoided
6. Additional fines up to three times the profit or loss avoided

Example:

In 2020, a high-ranking official of a multinational corporation operating in Armenia was penalized €4 million for insider trading.

Insider trading cases in Armenia reflect the gravity of the consequences for those found guilty. The financial costs, criminal penalties, and damage to reputations act as powerful deterrents for such market abuse behaviors. MAR regulations, combined with the potential consequences, serve to protect investors and promote a fair and transparent financial market.