Obligations on solicitors to keep insider lists under the Market Abuse Directive
Practitioners should note the provisions of the (2003/6/EC) (MAD) and the when advising on a matter in respect of an issuer listed on, or an issuer that has made an application to list on, a regulated market within the EU (relevant issuers). MAD encompasses a number of elements, but this note relates specifically to ‘inside information’ and the obligations on solicitors to keep insider lists.
Inside information
‘Inside information’ is information of a precise nature relating directly or indirectly to one or more issuers of financial instruments, or to one or more financial instruments that have not been made public, and which, if it were made public, would be likely to have a significant effect on the price of those financial instruments or on the price of related derivative financial instruments.
Obligation to maintain lists
Relevant issuers and solicitors working on their behalf (who have access to the inside information) must maintain a list of persons working for them who may have access to the inside information. It is not possible for a solicitor to assume or discharge these responsibilities for its client. Any list maintained by a solicitor’s practice should outline the identity of the staff members who have access to the information, the reason they have access to the information, and the date on which the list was created and updated. If any of the factors on the list change, it should be updated promptly.
Relevant employees (and partners) of a solicitor’s firm should certify that they understand the obligations placed on them under MAD; and the firm should have clear documentation of this for each matter. Lists must be submitted to the Central Bank upon request and must be maintained for a period of five years.
The MAD is currently under reform, with an expected transposition date in mid 2015. This is planned to coincide with the new Markets in Financial Instruments Directive (MiFID II). The changes are intended to strengthen confidence in European markets by developing a wider range of sanctions on a European level to keep pace with the rapid development of financial markets.