Media Article: New Insider Trading Penalties Introduced in Lebanon’s Capital Markets

In an effort to maintain fairness and transparency within Lebanon’s capital markets, a new law, known as Law No. 160, has been ratified. This decision outlines the terms and penalties for insider trading, ensuring a level playing field for all investors.

Key Definitions

• Inside Non-Public Information: Information that:
  1. Relates to one or more financial instruments or issuers of financial instruments.
  2. Has not been made public.
  3. Is of a precise and accurate nature, indicating circumstances that may exist or reasonably be expected to come into existence or an event that has occurred or may reasonably be expected to do so, significantly impacting the prices of the financial instruments or related derivative financial instruments.
• Financial Instruments: Shares, dividends, debt securities, certificates, instruments, or bonds whose revenues are linked to financial expenses. It also includes compound, derivative, indicator, or securitization-related financial instruments and compounds that give holders the right to underwrite, acquire, or abandon financial products.
• Realized Profit: Realized gain or avoided loss

Insider Trading Prohibitions

As per Article II, it is forbidden for:

1. Chairmen/members of the board of directors, directors-general, employees, auditors, commissioners, shareholders, or share owners.
2. Any other person with access to inside information by virtue of their profession, work, or mission, To directly or indirectly acquire, attempt to acquire, dispose, or attempt to dispose of securities related to inside non-public information, for their own account or for the account of a third party.

Consequences for Persons with Inside Information

Article III prohibits persons with inside non-public information from:

1. Disclosing inside non-public information to any third party, unless required as part of their regular duties or professions.
2. Counseling or giving advice of any kind to a third party in relation to the acquisition or disposing of rights related to financial products.

Additional Penalties and Effective Date

Article VI outlines the penalties for violators of this law, including:

• A term of imprisonment of one to three years.
• A fine not less than twice and not more than ten times the realized gain.
• A temporary or permanent ban from practicing a profession or work.

Article IX states that this decision will enter into force upon its publication in the Official Gazette.

These new penalties serve as a reminder of the importance of transparency and fairness in Lebanon’s capital markets, ensuring equal opportunities for all investors.