General information about sanctioning for infringement of the market conduct regulations

About sanctioning of infringements

Finanstilsynet supervises compliance with the market conduct regulations in the securities area and follows up matters relating to:

• Suspected insider dealing, unlawful disclosure of inside information and market manipulation
• The obligation to notify transactions for persons discharging managerial responsibilities (at issuers) and persons closely associated with them
• Mandatory disclosure obligation for large positions in issuers
• Short sales, including the obligation to report large net short positions and the prohibition against uncovered short sales
• Other conduct rules, including rules on market soundings, requirements for insider lists, investment recommendations, unreasonable business methods, reporting of suspected infringement (STORs) etc.

Supervision of the disclosure of inside information and delayed disclosure, stabilisation and buy-backs concerning issuers whose financial instruments have been admitted to trading on a regulated market or MTF has been delegated to the operator of the trading venue (Oslo Børs), cf. Section 17-1 of the Securities Trading Regulations. In addition, Finanstilsynet has designated Oslo Børs, as operator of the regulated market and MTF, as the recipient of lists of persons discharging managerial responsibilities and persons closely associated with them, cf. Section 3-3 of the Securities Trading Regulations.

Infringement of the conduct rules may be subject to administrative sanctions, e.g. in the form of administrative pecuniary sanctions, and/or criminal sanctions by the police/prosecuting authority. The rules on this are set out in Chapter 21 of the Securities Trading Act.

Which infringements may result in penalties?

Intentional or negligent infringement of the key conduct rules may be penalised. The infringements concerned and the resulting penalties are regulated in Section 21-15 of the Securities Trading Act:

There is a maximum penalty of 6 years for the following infringements:

• insider dealing and inducing others to engage in insider dealing
• market manipulation

There is a maximum penalty of 4 years for the following infringements:

• unlawful disclosure of inside information

There is a maximum penalty of 1 year for the following infringements (‘fines or imprisonment up to one year’):

• infringement of the rules on the prevention and detection of market abuse (e.g. failure to report suspicious orders and transactions)
• infringement of the rules on insider lists
• infringement of the notification obligation for persons discharging managerial responsibilities and persons closely associated with them
• infringement of the disclosure obligation
• infringement of the rules on investment recommendations and statistics
• infringement of the prohibition against unreasonable business methods
• infringement of the rules on reporting of net short positions
• infringement of the rules on uncovered short sales

Abetting can be sanctioned in the same way, cf. Section 21-13 of the Securities Trading Act. In case of suspected infringements that may result in penalties, Finanstilsynet may report the case to the police for criminal sanctions.

Which infringements may result in administrative pecuniary sanctions?

Infringement of the following conduct rules may result in administrative pecuniary sanctions: 

• The prohibition against the unlawful disclosure of inside information.
• The prohibition against market manipulation
• Infringement of the rules on the prevention and detection of market abuse (including STORs)
• Infringement of the rules on insider lists
• Infringement of the notification obligation for persons discharging managerial responsibilities and persons closely associated with them
• Infringement of the rules on investment recommendations etc.
• Infringement of the rules on reporting of net short positions and the prohibition against uncovered short sales
• Infringement of the mandatory disclosure obligation
• Infringement of the rules on reporting and the notification obligation and failure to comply with orders from Finanstilsynet, etc.

For natural persons, administrative pecuniary sanctions can only be imposed in connection with intentional or negligent infringement, while such sanctions may be prescribed for legal persons even if no individual person is at fault, cf. Section 21-9 of the Securities Trading Act, cf. Section 46, first subsection of the Public Administration Act. Abetting can be sanctioned in the same way, cf. Section 21-13 of the Securities Trading Act.

Some infringements of the regulations may be subject to both criminal and administrative sanctions. In such cases, an overall assessment of the infringement will determine whether to report the case to the police or impose administrative sanctions. In cooperation with the police/prosecuting authority, Finanstilsynet will determine which cases will be subject to criminal and administrative sanctions, respectively.

More about administrative pecuniary sanctions

Upper limit for administrative pecuniary sanctions, etc. and relevant aspects to be taken into account

In accordance with Section 44, second subsection of the Public Administration Act and MAR Article 30 concerning infringement of MAR, maximum administrative pecuniary sanctions have been set out in Sections 21-1 through 21-4 of the Securities Trading Act:

• For infringement of MAR and implementing and delegated regulations, Section 21-1 of the Securities Trading Act sets out a maximum administrative pecuniary sanction of NOK 43 million for natural persons and NOK 127 million or up to 15% of total annual turnover according to the most recent approved annual financial statements for legal persons.
• For infringement of the Short Selling Regulation (SSR) and associated level 2 regulations, section 21-2 (2) of the Securities Trading Act, cf. Section 21-5 (3)-(5) third to fifth subparagraphs, sets out a maximum administrative pecuniary sanction of NOK 43 million or up to two times the gain achieved or the loss avoided if this results in a higher fine.
• For infringement of the mandatory disclosure obligation, Section 21-3 of the Securities Trading Act sets out a maximum sanction of up to NOK 17 million for natural persons or NOK 82 million or up to 5% of the total annual turnover according to the most recent approved annual financial statements for legal persons, but nevertheless up to two times the gain achieved or the loss avoided if this is higher.

Whether Finanstilsynet imposes an administrative pecuniary sanction in the individual case, what form of sanction is imposed and the size of the sanction will depend on an overall assessment based on, among others, the seriousness and duration of the infringement, whether a legal or a natural person is involved, any previous infringements, the degree of individual fault, gains achieved or losses avoided, etc. Reference is also made to Section 21-14 of the Securities Trading Act and Section 46, second subsection of the Public Administration Act on the factors to be taken into account when deciding whether administrative pecuniary sanctions shall be imposed and making an individual assessment of the sanction. 

Finanstilsynet's practices – publication, etc.

Some EEA regulations, on which the market conduct rules in the Securities Trading Act are based, require that sanctioning decisions are published. With respect to infringements of MAR, Finanstilsynet shall as a rule publish decisions on administrative sanctions. Such publication shall include at least information on the type and nature of the infringement and the identity of the person subject to the decision (see MAR Article 34). Decisions shall be published on Finanstilsynet's website immediately after the person subject to the decision has been informed of the decision and shall remain accessible on the website for a period of at least five years.

There are restrictions on this obligation where disclosure is considered to be disproportionate, would jeopardise an ongoing investigation or the stability of the financial markets, etc. In such situations, publication may be deferred, the decision may be published on an anonymous basis and in some cases not be published. Where the decision is subject to an appeal, such information shall also be published, etc.

For information on the level of pecuniary sanctions for infringement of MAR in the EEA, reference is made to ESMA's annual report prepared in accordance with MAR Article 33. The report for 2019 can be found here.

EEA legislation also sets out other rules regarding reporting and publication. For example, Finanstilsynet is required, pursuant to Article 41 of the SSR, to provide ESMA annually with aggregate information regarding the sanctions imposed. If Finanstilsynet announces that a sanction has been imposed, ESMA shall be notified of this at the same time, cf. Article 41 of the SSR. 

Finanstilsynet's decisions to impose administrative pecuniary sanctions for infringement of the market conduct rules will, to the extent they are published, be accessible for a period of at least five years unless they for various reasons are fully or partially exempt from public disclosure and/or anonymised. Finanstilsynet would like to emphasise that there will be some delay before the decisions are published. If the decision is appealed, this will be specified here, together with any subsequent decisions by the complaints body, etc. Against this background, it is emphasised that the list of decisions concerning the market conduct rules that is published on the website is not complete.

Decisions on administrative pecuniary sanctions

Decisions – see short sales