Is your internal code of conduct up to date?

Spotlight
16 August 2017

More stringent criminal sanctions against market abuse and introduction of a whistleblowing scheme: new compliance obligations.

The act of 31 July 2017 (link) increases the term of imprisonment for persons guilty of (attempted) market abuse. In addition, persons and institutions licensed by or registered with the FSMA and the NBB are obliged to implement an internal whistleblowing scheme.

More stringent criminal sanctions for market abuse

As of 21 August 2017 the maximum term of imprisonment for market abuse is increased:

  • Insider dealing: 4 years (instead of 1 year)
  • Market manipulation: 4 years (instead of 2 years)
  • Unlawful disclosure of insider information: 2 years (instead of 1 year).

Furthermore, offenders can be ordered to pay criminal fines; ordered to pay up to three times the financial benefit resulting from the infringement; or face prohibition against exercising certain mandates, such as director, statutory auditor or manager of a company.

  • Issuers of financial instruments need to amend their Dealing Code.
  • They also need to obtain a written declaration from insiders confirming that they are aware of these new sanctions.

Whistleblowing scheme

The act of 31 July 2017 introduces a whistleblowing scheme for notification to the FSMA of actual or potential infringements of any of the rules that it monitors. The scope of this new regulation is very broad.

All persons or institutions licensed by or registered with the FSMA or the NBB must also implement suitable internal procedures for the reporting of such infringements. Although whistleblowers can alert the FSMA concerning infringements directly, they need to have the possibility of reporting an infringement internally.

This obligation applies inter alia to:

  • Credit institutions,
  • Credit providers and credit intermediaries,
  • (Re)insurance companies,
  • Investment firms,
  • (Management companies of) undertakings for collective investment,
  • Regulated real estate investment companies,
  • Intermediaries in banking and investment services,
  • (Re)insurance intermediaries,
  • Independent financial planners.

With effect from 3 January 2018, the FSMA can impose measures and sanctions if the relevant persons or institutions do not comply with this obligation.

  • All such persons and institutions need to implement adequate internal reporting procedures as soon as possible – taking into account, among other things, the applicable laws on data protection.
  • They also need to provide sufficient information on this internally – including, where appropriate, through the employee representation.

Do you have any questions about efficient implementation of these new obligations? Contact us!