EU update

Robert Bell, Partner, Nabarro Nathanson on 020 7524 6452, email: r.bell@nabarro.com

The EU Commission has adopted three implementing measures relating to the Directive on insider dealing and market manipulation (the Market Abuse Directive [MAD] 2003/6/EC). They cover, inter alia, detailed criteria on what constitutes inside information: it must, for example, be precise in that it has to indicate a set of circumstances in existence or expected to come into existence and specific enough that a reasonable investor would find it useful when making investment decisions. Provisions on how and when issuers must disclose the information are also covered: it must be made public promptly, including through announcements in newspapers distributed throughout the member state or states concerned. The measures also set out standards for the fair presentation of investment recommendations (such as the disclosures of conflicts of interest): any facts must be clearly distinguished from non-factual information; sources used must be reliable; all projections, forecasts and price targets need to be labelled clearly with all recommendations able to be substantiated as reasonable and not disproportionate (in the case of non written recommendations). Finally, they list conditions that must be fulfilled in order to benefit from exemptions from prohibitions on market abuse in the case of share buy-back programmes and price stabilisation of financial instruments: disclosure to the public must give details of the programme’s objectives, the number of shares to be acquired, maximum consideration and the period of authorisation. MAD covers all financial instruments admitted to trading on at least one regulated market in the European Union.