(CN) – A person trading on inside information is implicitly guilty of using that information, Europe’s highest court ruled, clarifying a European Union directive on inside dealing.
The Court of Justice said there’s no distinction between a person with inside information who trades on relevant shares and someone who uses the information with full knowledge.
The question arose when Spector Photo Group, a Belgian company, was suspected of inside trading for buying a load of its shares before publishing financial results and policy information that caused its share prices to climb.
The Court of Appeal of Brussels asked the European high court to interpret the phrase “use of inside information” as it appears in national law for insider trading.
The Luxembourg court said the phrase implies that an individual intended to use inside information to his or her advantage in the market.
The EU court did not rule on whether a court must take into account the money made from an inside trading deal when setting sanctions, saying it is up to each United Nations member state to decide the most “effective, proportionate and dissuasive” measure to sanction inside trading violations.
The high court also ruled that inside information does not have to affect stock price to be part of an inside trading case. And a court need not decide on criminal sanctions when it’s determining administrative sanctions, the ruling states.