Tuesday

19th Feb 2019

MEPs agree four-year jail term for insider trading

  • Rate-fixing and insider dealing will carry a four year prison sentence under new legislation voted Tuesday. (Photo: stefan)

Financiers in the EU who rig interest rates or take part in insider trading could face years in jail under legislation backed by MEPs on Tuesday (4 February).

As part of new rules which will come into force in 2016, traders found guilty of insider dealing and market manipulation would face a prison sentence of at least four years, while people who leak information which is used for insider trading will face a sentence of at least two years.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

The bill was backed by deputies in Strasbourg by an overwhelming 618 votes to 20.

Arlene McCarthy, the centre-left MEP tasked with piloting the laws through the European Parliament, described it as "a major step forward in ensuring market abuse is tackled across the EU."

"For the first time we will have EU-wide tough criminal sanctions with a minimum jail sentence of four years for insider dealing and market manipulation, which leaves member states free to introduce high sanctions should they desire," she said.

European governments currently have a patchwork approach to financial crime.

Market manipulation is not a criminal offence in Austria, Bulgaria, Slovakia and Slovenia, but there are provisions in criminal law on tipp-offs for insider trading in the Czech Republic, Greece, Finland, Germany, Italy, Slovenia and Spain.

McCarthy said that the rules “would ensure that those intent on committing market abuse can be sent to jail … and that there are no safe havens in Europe."

The new regime will allow both individuals and companies to be prosecuted for market abuse offences, while governments will also be able to levy fines of up to €5 million on individuals involved in rate-fixing.

The European Commission published draft legislation on market manipulation in 2011, but then updated it to include criminal sanctions for rate-fixing in the wake of the Libor scandal in July 2012.

The Libor affair saw the commission issuing fines totalling €1.7 billion to eight major US and European banks for forming a cartel to keep the interest rate at which banks lend to each other artificially high.

Allegations of rate rigging in the oil, gas and foreign exchange markets have also come to light.

But although a series of multi-million euro fines were handed to banks, and several top bank executives were forced to resign over Libor, nobody has faced prosecution for the rate-rigging, which affected an estimated $350 trillion in derivatives and around $10 trillion in loans and mortgages around the world.

EU justice commissioner Viviane Reding and the bloc's internal market boss Michel Barnier said the EU on Tuesday was "sending a clear signal: There must be zero tolerance for manipulators in our financial markets."

EU says Hungary's anti-Juncker campaign is fake news

The European Commission has branded the latest campaign by the Hungarian government as 'fake news', after Orban's government accused Juncker of pressing ahead with migration proposals that threaten the country's security.

Stakeholders' Highlights

  1. Nordic Council of MinistersMilestone for Nordic-Baltic e-ID
  2. Counter BalanceEU bank urged to free itself from fossil fuels and take climate leadership
  3. Intercultural Dialogue PlatformRoundtable: Muslim Heresy and the Politics of Human Rights, Dr. Matthew J. Nelson
  4. Platform for Peace and JusticeTurkey suffering from the lack of the rule of law
  5. UNESDASoft Drinks Europe welcomes Tim Brett as its new president
  6. Nordic Council of MinistersNordic ministers take the lead in combatting climate change
  7. Counter BalanceEuropean Parliament takes incoherent steps on climate in future EU investments
  8. International Partnership For Human RightsKyrgyz authorities have to immediately release human rights defender Azimjon Askarov
  9. Nordic Council of MinistersSeminar on disability and user involvement
  10. Nordic Council of MinistersInternational appetite for Nordic food policies
  11. Nordic Council of MinistersNew Nordic Innovation House in Hong Kong
  12. Nordic Council of MinistersNordic Region has chance to become world leader when it comes to start-ups

Latest News

  1. EU says Hungary's anti-Juncker campaign is fake news
  2. Trump right for once: Europe should take back foreign fighters
  3. EU should clarify rules for plant burgers and lab meat
  4. Italian populists could be second biggest force in EU parliament
  5. Merkel defends Russia ties, ridicules Trump on cars
  6. British MPs condemn Facebook CEO's misrule
  7. EU's chance to step up on Hungary and Poland
  8. ESA pushback against new EU space agency plan

Join EUobserver

Support quality EU news

Join us