In their recent paper, Mathijs Giltjes (PhD candidate at Erasmus School of Law) and Arnoud Pijls (assistant professor of Corporate Law and Financial Law at Erasmus School of Law) discussed the European regime governing the disclosure of inside information.
In particular, they try to find an answer to the question of which duties of the disclosure regime have been violated in two situations: where i) inside information is selectively disclosed to third parties and ii) the confidential nature of the inside information is no longer ensured if the disclosure of that information has been delayed. The requirements of the public disclosure of inside information are set out in Article 17 of the Market Abuse Regulation (MAR). The issuer’s primary duty to disclose inside information follows from Article 17(1) MAR. Separate disclosure duties have been included in Article 17(8) and Article 17(7) MAR for, respectively, the two situations referred to above. Commentators have raised doubts over the necessity and function of Article 17(8) MAR. Similar doubts could be raised over Article 17(7) MAR. In this paper they defend the independent status of these legal provisions by focusing on their function of serving legal certainty.
Selective Disclosure of Inside Information
Article 17(8) MAR stipulates that an issuer must make complete and effective public disclosure of any inside information shared with any third party by that issuer in the course of its business or by a person acting on behalf or for the account of that issuer in the normal course of the exercise of his employment, profession or duties (“selective disclosure”), unless this third party owes a duty of confidentiality. Selective disclosures include, for example, the sharing of information with (major) shareholders during a shareholder meeting and the sharing of information with investment analysts. Article 17(8) MAR is the European counterpart to Section 243.100 of Regulation FD (“Reg FD”). In the U.S., information regarding the issuer was frequently first shared with investment analysts before it was made publicly available. Partly based on the fact that a continuous duty to disclose inside information is absent under U.S. federal law, it has been argued that copying Section Reg FD into the European legal framework has the undesirable effect of (unjustly) granting issuers a second chance to disclose inside information. From this point of view, it has even been advocated that Article 17(8) MAR should be deleted entirely.
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