Local view for "http://purl.org/linkedpolitics/eu/plenary/2014-02-04-Speech-2-047-000"
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"en.20140204.4.2-047-000"2
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"Mr President, as always, I want to place on record my thanks to everyone: to my shadows, to Emine Bozkurt as the Committee on Civil Liberties, Justice and Home Affairs (LIBE) rapporteur, to both Commissioners Barnier and Reding and to all our staff and experts, who worked extremely hard and, indeed, to the Lithuanian Presidency for their dedication and commitment in helping me to deliver these ground-breaking new rules, which will bring in strong EU-wide criminal sanctions to ensure that those intent on committing market abuse can be sent to jail in all 28 Member States.
This will be my last legislative work in this Parliament. Many of you will know that I have decided not to stand as a candidate in 2014, and so it is a real privilege for me to be able to work on this very important dossier, which I hope will establish trust and confidence in the internal market and financial services.
So why do we need this new law? Currently it is not a criminal offence to commit market manipulation in Austria, Bulgaria, Slovakia and Slovenia, and it is not a criminal offence to commit insider trading on the basis of tip-offs – i.e. passing inside information to a secondary insider – in Bulgaria, the Czech Republic, Greece, Finland, Germany, Italy, Slovenia and Spain. So we have a big gap that we need to fill.
The new rules therefore send a strong message that there are no safe havens in the EU for any market abuse behaviour, and they will serve as a deterrent for anyone intending to commit criminal acts of market manipulation and insider dealing. Just last week, the UK Financial Regulator arrested and charged a ninth suspect, a former US hedge fund trader, as part of Britain’s largest insider dealing investigation. The traders had operated a sophisticated insider dealing ring in 2007 but they have only been brought to justice seven years later, indicating how high the bar is to get a successful prosecution. That is why Parliament insisted, in the negotiations, that Member States ensure their judicial authorities and regulators are properly trained to monitor, investigate and tackle market abuse, and that their law enforcement, judicial authorities and regulators have effective investigative tools in place.
Since the financial crisis in 2008, more serious cases of abuse and manipulation, such as the Libor interest rate rigging scandal, have come to light, but no one has gone to jail. Parliament, in demanding EU-wide minimum levels of sanctions, wanted to ensure that Member States take a tough stance on market abuse, and despite strong resistance from some Member States, for the first time ever we are now introducing minimum jail sentences of four years for market manipulation, ensuring that they can face a criminal sentence. Of course, depending on the severity of the offence, Member States can go further and send offenders to jail for longer than four years.
With the market abuse regulation voted on in September, introducing tough administrative fines, the new rules will ensure that all Member States define market abuse in the same way and that manipulation of interest rates and benchmarks such as Libor are now in the scope and are covered by the rules.
The Libor scandal and the manipulation of key interest rates was market manipulation of the worst kind. Making manipulation of interest rates and benchmarks a criminal offence therefore again closes a loophole which allows benchmarks which set the prices for USD 350 trillion in derivatives and around USD 10 trillion in loans and mortgages around the world, to stop this kind of manipulation and therefore to protect consumers and those who are dependent on those interest rates for their mortgages. To date, those who commit this kind of market abuse in Europe have had to be sent to the US to face the full force of the law. It is now good, therefore, that we have introduced these rules into the EU.
During the financial crisis, companies turned a blind eye, or did not have the systems in place for proper control of market abuse. Under the new rules, for the first time both companies and individuals can be criminally prosecuted. This again is an important step forward to ensuring companies are held to account for their complicity and their part in market abuse.
Member States will also now have the option to provide that market manipulation committed recklessly or by serious negligence can constitute a criminal offence. There have been countless examples during the crisis of banks acting recklessly. However, this behaviour has largely gone unpunished. Today I urge the Member States to bring this behaviour into the scope of their national law, to ensure that the kind of reckless and negligent behaviour we saw during the crisis is finally subject to the full force of these rules and to strong criminal sanctions."@en1
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