Annexes to COM(2010)716 - Reinforcing sanctioning regimes in the financial services sector - Main contents
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This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2010)716 - Reinforcing sanctioning regimes in the financial services sector. |
|---|---|
| document | COM(2010)716  |
| date | December 8, 2010 |
Finally, the Commission will consider whether further convergence on other specific issues, such as the rules on the burden of proof, would be necessary to ensure sanctions provided for by law are effectively applied.
5. CONCLUSION
The financial crisis has shown that financial market rules are not always respected and applied as they should be. This has seriously undermined confidence in the financial sector. While recognising that stricter sanctioning regimes cannot remedy all problems related to the application of EU financial services rules, the Commission believes that greater convergence and reinforcement of existing national regimes can significantly help to prevent risk of improper functioning of financial markets and assist the development of a level playing field within the Internal Market.
The Commission welcomes comments from Member States and other stakeholders on the analysis of the shortcomings identified and the policy proposals suggested in this Communication. Stakeholders are in particular invited to indicate whether there is any issue they do not consider appropriate for further approximation and whether there are areas in which the Commission should consider additional actions.
The Commission invites all interested parties to send their contributions to: markt-sanctions-consultation@ec.europa.eu, by 19 February 2011.
The responses received will be available in the Commission website unless confidentiality is specifically requested, and the Commission will publish a summary of the results of the consultation.
The Commission will take into account the comments received, should it decide to make appropriate proposals on how to reinforce national sanctioning regimes in a consistent manner. Any future legislative initiative in this field would be accompanied by an impact assessment of the relevant sanctions related issues.
[1] Report of the High-level Group on Financial supervision in the EU chaired by Jacques de Larosière, 25.2.2009, par. 201.
[2] In November 2010, the European Parliament and the Council adopted legislative acts establishing a new supervisory framework for financial regulation in Europe, including the creation of the European Securities and Markets Authority (ESMA), the European Banking Authority (EBA), and the Occupational Pensions Authority (EIOPA), see COM(2009) 499, COM(2009) 501 and COM(2009) 502. These Authorities will have powers to carry out peer reviews of national authorities including sanctioning powers, and will receive information about sanctions applied by national authorities. Those powers can be used to monitor national legislation and to promote exchange of information and best practices between Member States. They have also the power to settle disagreements between national authorities, in some areas that require cooperation, coordination or joint decision-making by different supervisory authorities. In its Proposal on amending Regulation (EC) No 1060/2009 on credit rating agencies - COM(2010) 289 -, the Commission also proposes to entrust the European Securities and Markets Authority with the power to take appropriate supervisory measures in case of infringements of the Regulation and to ask the Commission to impose on a credit rating agency a fine in some specific cases.
[3] The European Council, in its "Stockholm Programme – an open and secure Europe serving and protecting citizens" of 2.12.2009, emphasised the need to regulate financial markets and prevent abuse and invited the Member States and the Commission to improve the detection of market abuse and the misappropriation of funds. The JHA Council conclusions on economic crisis prevention and support for economic activity, stressed that consideration could be given to whether it is possible or, as the case may be, appropriate to harmonise criminal laws regarding the handling of serious stock market price manipulations and other misconduct relating to securities markets. See Docc. 8920/10 of 22.4.2010 and 7881/10 of 29.3.2010.
[4] Capital Requirements Directive 2006/48/EC (OJ L 302, 17.11.2009); Markets in financial instruments Directive 2004/39/EC (OJ L 145, 30.4.2004); Market Abuse Directive 2003/6/EC (OJ L 96, 12.4.2003); Solvency II Directive 2009/138/EC (OJ L 335, 17.12.2009); Prospectus Directive 2003/71/EC (OJ L 345, 31.12.2003); Insurance Mediation Directive 2002/92/EC (OJ L 9, 15.1.2003); Anti-Money Laundering Directive 2005/60/EC OJ L 309, 25.11.2005); UCITS Directive 2009/65/EC (OJ L 302 17.11.2009).
[5] CEBS: "Mapping of supervisory objectives, including early intervention measures and sanctioning powers", March 2009/47, CESR: "Report on administrative measures and sanctions as well as criminal sanctions available in Member States under the Market Abuse Directive", 17.10.2007; "Report on the mapping of supervisory powers, supervisory practices, administrative and criminal sanctioning regimes of MS in relation to the MiFID Directive; 16.2.2009, 08/220, "Report on CESR members' powers under the Prospectus Directive and its implementing measures" June 2007, 07-384; CEIOPS: "Report to the European Commission on EU supervisory powers, objectives, sanctioning powers and regimes", 29.5.2009, 21/09. This Communication is based on the information provided in those reports and the contributions subsequently received from Member States.
[6] COM(2010) 301.
[7] Subsequent G20-meetings called for the need to strengthen financial supervision and regulation to promote, among others, market integrity and support market discipline (London, April 2009) and for actions to protect consumers, depositors and investors against abusive market practices (Pittsburgh, September 2009)
[8] The Dodd-Frank Wall Street Reform and Consumer Protection Act, (July 2010) provides a comprehensive reform of the American financial system. Its practical implementation is subject to a substantive amount of rules being developed by the responsible US regulatory agencies in order to give effect to the high-level provisions of the Act. The reform envisages, for instance, the creation of financial incentives for whistleblowers to report to the SEC violations of securities laws, the strengthening of the SEC’s authority to pursue actions for aiding and abetting any person who violated the federal securities laws, and a lower standard of proof on this.
[9] A review of the supervisory powers available to national banking supervisors is carried out for example in the ongoing work on crisis management.
[10] See Commission work program 2011, par. 2.6 - COM(2010) 623.
[11] Market Abuse Directive, Article 16. Solvency II, Article 250(1)(b); CRD, Article 132(1)(d). Solvency II, Articles 155(3), 158(2); CRD, Article 30(3); MiFID, Article 62(2); UCITS, Articles 21(5) and 108(5); Prospectus Directive, Article 23. MiFID, Articles 32(7) and 62(2); UCITS, Article 108(1)), (UCITS, Article 109(2); MiFID, Article 62(2.)
[12] Article 51(1) of MiFID Directive stipulates, for example, that: "Without prejudice to the procedures for the withdrawal of authorisation or to the right of Member States to impose criminal sanctions, Member States shall ensure, in conformity with their national law, that the appropriate administrative measures can be taken or administrative sanctions be imposed against the persons responsible where the provisions adopted in the implementation of this Directive have not been complied with. Member States shall ensure that these measures are effective, proportionate and dissuasive". See also Article 25 of the Prospectus Directive 2003/71/EC, Article 14 of the Market Abuse Directive 2003/6/EC (interpreted by the Court in the case C-45/08, Spector Photo Group and Van Raemdonck/CBFA, judgment of 23.12.2009, para 65-77), and Article 28 of Directive 2004/109/EC on transparency requirements, Article 99(1) of UCITS Directive 2009/65/EC, Article 54 of Directive 2006/48/EC on credit institutions, or Article 34 of Solvency II Directive 2009/138/EC -, Article 39(2) of the Directive on money laundering, providing also for sanctions against natural persons. Recital 38 of the Market Abuse Directive specifies that "sanctions should be sufficiently dissuasive and proportionate to the gravity of the infringement and to the gains realised".
[13] See MiFID Article 50, CRD Article 136, UCITS Article 98, Solvency II Article 34, Prospectus Article 21.
[14] See Articles 62, 258(2) of Directive 2009/138/EC - Solvency II; Article 99(2) UCITS; Article 8(1)-(3) of Directive 2002/92/EC on insurance mediation.
[15] This concerns mainly the withdrawal of an authorisation, see e.g. Directive 2009/138/EC (Solvency II), Article 144(1); Directive 2006/48/EC (CRD), Article 17.
[16] See e.g. Directive 2009/138/EC (Solvency II), Article 131 and 144(2).
[17] For example Article 51(3) of Directive 2004/39/EC - MiFID, Article 25(2) of the Prospectus Directive 2003/71/EC, Article 28(2) of Directive 2004/109/EC on transparency requirements, Article 14(4) of Market Abuse Directive 2003/6/EC, Article 99(3) of Directive 2009/65/EC – UCITS.
[18] The examples provided in this section do not mention the Member States concerned, as their purpose is only to better illustrate the general problems identified. More information can be found in the reports of the Committees of Supervisors on which this Communication is based.
[19] See for example FSA press release No FSA/PN/098/2003 of 25/09/2003.
[20] Sources: information provided by CESR members on sanctions envisaged in national rules transposing the UCITS Directive.
[21] E.g.: in the banking sector, some Member States did not impose any sanction in 2006-2007-first quarter 2008.
[22] A competent authority may delegate tasks and responsibilities to other competent authorities under certain conditions, to ensure effective cross-border supervision.
[23] The legal bases for EU action in this field would be the Treaty's internal market provisions concerning the approximation of laws (Article 114 TFEU), the coordination of rules on taking up and pursuing activities as self-employed persons and freedom to provide services (Articles 53(1) and 62 TFEU). They provide the EU legislature with the possibility of adopting measures for the approximation of national laws, with the purpose to improve the conditions for the establishment and functioning of the internal market. This may include legislative measures relating to sanctions if they are necessary in order to ensure that EU rules are fully effective. The introduction of such measures in the EU financial services legislation would be based on the same legal basis as the sectoral legislative acts concerned. Article 83 TFEU also provides a legal basis for the establishment of minimum rules concerning the definition of criminal offences and sanctions, when the approximation of criminal laws proves essential to ensure the effective implementation of a Union policy in an area which has been subject to harmonisation measures.
[24] Most Directives provides that sanctions can be imposed on the persons responsible for the infringement, but without clarifying whether this includes natural and legal persons. There are some exceptions, eg Solvency II Directive 2009/138/EC, Article 34 ("The supervisory authorities shall have the power to take any necessary measures, including where appropriate, those of an administrative or financial nature, with regard to insurance or reinsurance undertakings, and the members of their administrative, management or supervisory body").
[25] See footnote 3.
[26] See programmes established by OFT and SEC to reward whistleblowers.