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The new Securities Market Act and related laws were initially
scheduled to enter into force 1st July 2012, but the decision has
been postponed to autumn 2012.
2. The purpose of amendments relating to sanctions
The law is intended to be amended in order to make the sanctions
better correspond to sanctions of other EU member states, taking
into account current and upcoming EU-legislation. The purpose is to
make the sanctions functional and effective in relation to the act
in question. The sanctions in other member states, like e.g. United
Kingdom, France, Germany and Sweden, are much more severe than
those in Finland.
As of today, the Financial Supervisory Authority (hereinafter
"FSA") may impose the following administrative sanctions:
conditional fines, administrative fines, public reprimands, public
warnings and penalty payments. One of the FSA's many tasks is
to supervise compliance with legal provisions concerning financial
markets. Hitherto, the FSA has imposed a few administrative
sanctions every year, but no penalty payments. One purpose of the
amendments to sanctions is to ensure that mild consequences for
forbidden actions and the low use of administrative sanctions do
not give an advantage to parties not following the regulations over
parties applying the regulation.
The amendments regarding sanctions are meant to emphasise the
FSA's obligation to act as a supervisory authority. The purpose
of the amendments is to make the administrative sanctions more
applicable and to expedite and encourage the use of them. The
current regulation requires authorities to meet many criteria
before being authorised to use their right to impose penalty
payments. The new regulation will obligate the FSA to, as a main
rule, use administrative sanctions when applicable.
Amendments to change the scope of essential elements of an
offence have not been considered necessary. The purpose is to
increase the risk of getting caught for violating regulations
regarding the financial markets and to ensure that neglecting the
regulations is not financially beneficial. The administrative
sanctions would not remove the liability for eventual
compensations.
3. Changes regarding sanctions
One of the changes to the administrative sanctions is the
removal of the public reprimand. The public warning will be the
primary sanction in all situations other than that of
administrative fines and penalty payments.
The administrative fine is intended to be used in less severe
cases than the other administrative sanctions. The administrative
fine is intended to be an "automatic" sanction imposed
when the requirements by law are fulfilled. The Government Bill (HE
32/2012 vp) names as example a situation when neglecting the time
frames regarding the disclosure obligation regulated in Chapter 7
of the new Securities Markets Act. The administrative fine for
legal persons will be increased to 5 000 – 100 000
€ and for natural persons to 500 – 10 000
€. The amounts of fines are increased mainly for
preventive purposes and in order to provide the FSA with
appropriate tools for indicating the blameworthiness of the
action.
According to the proposed law, the FSA may issue a public
warning to a supervised entity or actor on the financial markets,
who deliberately or by neglect acts in violation of the relevant
regulations. The public warning is intended to be used in response
to violations more severe than those requiring an administrative
fine. In practice, however, there may be cases where the
administrative fine constitutes a more severe consequence for the
affected party.
The penalty payment is intended to be the most severe
administrative sanction. It is proposed that the applicability of
the penalty payment be widened to encompass some other regulations
of the financial market besides the Securities Markets Act. The
amount of the penalty payment regarding legal persons will be
increased so that the maximum amount of the penalty payment would
be 10 % of the revenue the year before the violation, not exceeding
10 million euro (€). Regarding natural persons, the
maximum amount of the penalty payment would be increased to 10 % of
the latest taxable income, not exceeding 100 000 euro (€).
According to the new Securities Markets Act, the FSA would be
entitled to impose penalty payments to a maximum amount of 1
million euro (€). The Market Court would impose the
payment of even greater amounts upon request by the FSA.
If the violating act or neglect is not aggravated but fulfils
the requirements in chapter 51 of the Criminal Code the FSA may, in
some situations, impose a penalty payment instead of initiating a
criminal investigation. In these cases, the violation in whole has
to be considered to have been made in mitigating circumstances.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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