Insider Trading
LexInter | September 13, 2019 | 0 Comments

Insider Trading

The  insider trading (v. GLOSSARY ) is an infringement resulting from the use of confidential information on a listed company. It is provided for by article 10-1 of ordinance n ° 67-833 of September 28, 1967 which was codified as article L 465-1 of the Monetary and Financial Code.

This use of inside information is sanctioned because it distorts investors’ confidence in the equality of the market. The holder of confidential information has an obligation to abstain until the information is public.

The offense is sanctioned whether it is committed by the leaders, who are the “primary insiders” insofar as they are naturally custodians of confidential information, but also all the “secondary insiders”. 

Anyone (consultant, banker, journalist, shareholder, civil servant, etc.) can be prosecuted if they have obtained sufficiently precise information within the framework of their personal functions.

The information criteria is based on the qualification of the information as being precise, confidential and likely to influence the price of the security. This is an objective criterion on the content of the information. The corporate interest is likely to be a justifying fact but it is up to the insider to report the proof.

Case law punishes “receiving insider trading” in the event of disclosure to a third party who uses this information knowing that it is confidential.

The penalty can be up to two years in prison and a fine of up to 10 MF or ten times the profit made. The offenses are prosecuted before the criminal court.

Case law has considered that the corporate interest could justify an insider transaction (Paris Court of Appeal, September 11, 2001, Caisse centrale de crédit coopératif v Commission des operations de Bourse, Monthly Bulletin COB, n. 360, 01 / 09/2001, p 9)


The justifications for the penal fight against insider trading, Vauplane, Hubert de; Denoun, Catherine, Les Petites Affiches, 03/28/1994, pp 4-10

Trial application of the economic analysis of the law to stock market regulation of insider trading, Gounot, Marc Emmanuel, Revue de science criminelle et de droit penal comparé, 04/01/2000, pp 335-350

The control of financial information, the American experience, Kenadjian, Patrick, Les Petites Affiches, 16/10/1998, pp 31-41


Case law

From illicit canvassing to insider trading, including the illegal exercise of portfolio management, Court of Cassation, Criminal Chamber, October 15, 1998, Noémie, Sophie, Bulletin Joly Bourse et produits financiers, 01/01/1999, pp 67-74

Paris, January 28, 1985, Gaz. Pal. 1985, I, p. 287; COB regulation number 90-08 of July 17, 1990; Court of Cassation, Criminal Chamber, October 26, 1995, small posters, Péchiney, October 24, 1995, number 141, p. 19; Court of Cassation, Commercial Chamber, April 9, 1996, Dr. companies, June 1996, com., Number 138; Court of Cassation, Commercial Chamber, October 5, 1999, Dr. companies, January 2000, p. 17

Paris Court of Appeal, 9th Chamber, section B, October 26, 1999, Rontchevsky, Nicolas, Bulletin Joly Bourse et produits financiers, 03/01/2000
PAGE (S) 153-162

Insider trading and corporate interest

Cass.Com., October 05, 1999, Mr. Roger Haddad against Agent Judiciaire du Trésor (AJT); Hovasse, Henri, Company law, 01/01/2000, pp 17-20,; Pietrancosta, Alain, Bulletin Joly Sociétés, 12/01/1999, pp 1193-1201

The principle of equality before information in the repressive stock market system (about the Haddad affair), Moulin, Jean-Marc, Bulletin Joly Bourse et produits financiers, 03/01/2000, pp117-134

The insider must provide proof of the supporting fact drawn from the corporate interest of the transaction carried out, Cass. Com. number 1439 P, October 05, 1999, Haddad against Agent Judiciaire du treasures (AJT); Rontchersky, Nicolas, Bulletin Joly Bourse and financial products, 01/01/2000
PAGE (S) 38-43

Note under the judgment of the Court of Cassation, Criminal Chamber, June 26, 1995, small posters 1995, Sené, Pierre-Henri, Gazette du Palais, 13/10/2000, pp 38-40

Personal interest and exoneration in insider offenses, Paris Court of Appeal, Economic and Financial Chamber, May 13, 1997, Haddad v. Agent Judiciaire du Trésor, Vauplane, Hubert de, Bulletin Joly Bourse et produits financiers, n ° 4 , 07/01/1997, pp. 628-637


Note under the Strasbourg Criminal Court, April 20, 1999, MP against D.; Paris Court of Appeal, Chamber number 1 H, July 02, 1999, Quarterly review of commercial law, 10/01/1999, pp 919-928

Paris Court of Appeal, Chamber number 9, January 15, 1992; Court of Cassation, Criminal Chamber, March 15, 1993, Société Générale de Fonderie case 

Insider trading, legal person, extension of the sentence to company directors, dissemination of false or misleading information, complicity of the banker, compensation for damage, Peltier, Frédéric, Banque et Droit, 01/11/1993, pp 22-24

insider trading and data rooms

Insider crime and breach in the practice of Data rooms, Faugérolas, Laurent; Moser, Adrien, Banking and Stock Exchange Law Review, 05/01/1999, pp 90-92

How to reconcile the necessary setting up of a Data Room when acquiring shares in a listed company with the law of insider trading and breaches ?, Faugérolas, Laurent; Moser, Adrien, JCP E Semaine Juridique (company edition), 04/29/1999, pp 752-754

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