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18/03/2024 Déontologie

How does the AMF sanction market abuse?

Michel Berger, member of the SFAF's Ethics Commission, takes a look at the AMF's Enforcement Committee, how it works, who makes it up and what its missions are.

Sanction decisions
In the event of a breach of the law or regulations falling within the remit of the Autorité des marchés financiers (AMF), the AMF Board may refer the matter to the Enforcement Committee.
With regard to market abuse, the basis for referral is the so-called MAR (Market Abuse Regulation) regulation of the European Union (Regulation no. 596/2014 of April 16, 2014 on market abuse), which came into force on July 3, 2016. Like all European Union regulations, it applies without transposition into national law.
An autonomous body in its decisions, the Enforcement Committee comprises twelve members, including four magistrates, six professionals and two representatives of financial sector employees.
The process begins with a decision by the AMF Secretary General to open an investigation, and continues with an investigation and report drawn up by the AMF's Investigations and Controls Division. This is a procedure during which the parties concerned have the opportunity to provide explanations, before, where appropriate, a notification of grievances is issued by a specialized Commission of the Board. The case is then referred to the Enforcement Committee.
The Enforcement Committee's decision is taken after the respondents have submitted their observations. Its decision may be appealed to the Paris Court of Appeal, the Chamber of Economic and Financial Regulation (sanctions against professionals or their agents) or the Conseil d'Etat (other sanctions).
Although the AMF's decision is enforceable, a stay of execution may be requested before the appeal court (in summary proceedings for the Conseil d'Etat, before the First President for the Court of Appeal), the criterion being the possible disproportionality of the consequences of execution in relation to the situation of the sanctioned party - regardless of the apparent success of the appeal. 

To avoid a sanction decision, the AMF and the respondent may enter into an "administrative composition agreement", approved by the Enforcement Committee. The Commission may refuse to approve the settlement, particularly if it wishes to establish a precedent.
To reach a settlement, the case must be analyzed by a qualified, objective third party to assess its chances of success. Analysis by a third party thus avoids subjective bias and can be used in the defense if there is an interest. In the event of defeat before the AMF and appeal, a settlement could still be sought, either directly or by requesting mediation before the appeal court. However, at this stage, a valid settlement would appear particularly difficult to obtain, since it would probably have to be approved by the Enforcement Committee, which has already given its verdict.
The AMF's institutional mediator is a consumer mediator whose role is not to intervene to enable such a settlement. If mediation were to be organized at this stage on the initiative of the respondents, assuming that the AMF accepts it, it would have to be organized outside the framework of the institutional mediator. 

No cumulation of proceedings
Since a decision by the Constitutional Council on March 18, 2015 (2014-453/454 QPC and 2015-462 QPC), an accumulation of prosecutions before the Enforcement Committee and before the criminal court has been deemed unconstitutional.
Insider misconduct is distinguished from insider trading by the criminal nature of its legal definition, whereas the Enforcement Committee is not and cannot be a criminal court in the sense of criminal law. In particular, it cannot impose prison sentences. Similarly, a distinction is made between a market manipulation offence and a market manipulation offence, depending on the decision-making body.
One disadvantage of having a case brought before the AMF Enforcement Committee is that a person who feels aggrieved will not be able to bring a civil action, unlike in the correctional system, where the consequences are potentially heavier for the respondent.
Law no. 2016-819 of June 21, 2016, reforming the system for punishing market abuse, organizes the division between the Enforcement Committee and the criminal courts.

Reasons for the decision
In examining the decisions of the AMF's Enforcement Committee, it will be interesting to highlight the way in which it reasons, particularly with regard to evidence. Indeed, while the Commission can establish facts through material evidence, it can also base its decision on a body of corroborating evidence, and it remains to be seen how this is translated into a decision.