Financial Crime World

Financial Regulation Violations in France: A Look at the Relevant Laws and Enforcing Authorities

In the complex world of financial markets, maintaining regulatory compliance is a fundamental requirement. France, a key player in the European Union’s (EU) financial landscape, has established a robust regulatory framework to ensure financial integrity and orderly markets. This article delves into the main regulations and government authorities responsible for investigating and enforcing financial regulations in France.

Regulatory Framework in France

The French financial regulatory system is built on a combination of EU regulations and directives and the French Monetary and Financial Code.

EU Regulations and Directives

  • EU Market Abuse Regulation (MAR): EU No. 596/2014
  • Regulation No. 600/2014 on markets in financial instruments (MiFID II)

French Monetary and Financial Code

  • Article L621-1, etc.

Enforcing Authorities

The Financial Markets Authority (AMF)

  • Created by Law No. 2003-706 of 1 August 2003
  • Mandate includes safeguarding investments, ensuring investors receive material information, and maintaining orderly financial markets
  • Regulates financial markets, market infrastructures, listed companies, and financial intermediaries

Enforcement Powers

  • Request documents
  • Interview individuals
  • Enter business premises
  • Carry out house searches
  • Seize documents based on a reasoned order from a judge
  • Impose financial and disciplinary sanctions against professionals

The National Financial Prosecutor (PNF)

  • Created by Law No. 2013-1117 of 6 December 2013
  • Exclusive jurisdiction to investigate and prosecute market abuse that constitutes a criminal offense

Market Abuse Proceedings

Historically, a person committing market abuse could face proceedings from both the AMF and a criminal court. However, following the Grandes Stevens case and a decision from the Constitutional Council, French Law No. 2016-819 of 21 June 2016 prohibited duplicate proceedings in market abuse cases.

Collaboration between AMF and PNF

  • Authorities must collaborate on market abuse proceedings
  • Paris Court of Appeal’s Attorney General decides which authority will handle the case

Opening an Investigation

The Secretary General of the AMF or their delegate can open an investigation following alerts, complaints, or requests from a third party or a foreign authority. There is no specific rule governing the required level of suspicion for opening an investigation.

Focus of AMF Enforcement

The AMF focuses primarily on enforcing financial regulations related to market abuse:

  • Insider dealing
  • Price manipulation
  • Dissemination of false information
  • Listed companies’ failure to fulfill their informational duties

International Cooperation

The AMF can cooperate and exchange information with equivalent authorities from other EU Member States and foreign countries for investigative and cooperative purposes. France is also a signatory to the 2002 International Organization of Securities Commissions Multilateral Memorandum of Understanding, which promotes consultation and cooperation and the exchange of information between securities regulators worldwide.

In conclusion, the financial regulation landscape in France is governed by a blend of EU regulations and domestic laws, with the AMF and PNF playing pivotal roles in investigating and enforcing financial regulations. The system is designed to maintain a balance between protective measures against market abuse and safeguards for individual privacy, as well as international cooperation to ensure effective and comprehensive supervision of financial markets.

Footnotes

(1) European Union regulations and directives: EU Market Abuse Regulation (EU) No. 596/2014 & Regulation (EU) No. 600/2014. (2) French Monetary and Financial Code: Article L621-1, etc. (3) AMF general regulatory powers: Articles L621-6, L621-10, & L621-12. (4) Article 706-1-1, Code of Criminal Procedure; Grande Stevens and Others v. Italy, ECHR, 4 March 2014, Case No. 18640/10; Law No. 2016-819 of 21 June 2016. (5) Article L621-3-6, Monetary and Financial Code. (6) Financial Markets Authority (AMF), Investigation Guide, 2023. (7) AMF annual reports: 2022, 2021, 2020, 2019, & 2017. (8) Article L632-1, Monetary and Financial Code.