Insider information is a collection of specific and accurate information that contains official, banking or other types of organizational secrets. Naturally, the presented type of information is strictly protected by law and cannot be disclosed without the appropriate permission of the management. Legislative regulation of the formation and use of insider information is provided by Federal Law No. 224-FZ. The provisions of this normative act will be described in the article.
What is insider information?
The presented type of information contains a number of important information about the financial position of an organization. That is why the dissemination or provision of such information can extremely negatively affect the functioning of the relevant enterprise.
The conclusion of transactions, operations with financial instruments, the sale of goods - information about all these elements may contain the so-called insider. As a rule, the leadership of an organization establishes a number of rules for the dissemination of insider information. So, the disclosure of established information is possible only to a strictly defined circle of persons.
Insider Content
What can be included in the insider? The relevant federal law regulates the list of information that may be subject to protection. Here it is worth highlighting the information:
- about decisions made about tenders or tenders;
- about actions taken in relation to certain persons, about cancellation or withdrawal of a license, etc .;
- on inspections conducted or on the results of the control and evaluation activities of the relevant authorities;
- on bringing to administrative responsibility of individuals, etc.
The Bank of Russia is obliged to draw up special regulations that contain a list of requirements for insider information.
About Insiders
The subjects of the insider are the so-called insiders - special officials involved in the protection, limited distribution, use, and sometimes elimination of insider information. Here's who belongs to the group of individuals represented:
- organizers of trade and credit events, as well as clearing type organizations, etc .;
- management companies and issuers;
- business entities (but only those included in the register established by the Federal Law "On Protection of Competition");
- professional representatives of the securities market;
- individual heads of relevant departments from federal executive bodies;
- representatives of the board of directors, the sole executive body or the audit commission;
- persons owning more than 25% of the vote in the supreme governing body (the same with shares);
- other persons with legal access to insider information.
Any of the individuals represented may be prone to misuse of insider information. This, for example, market manipulation, the commission of transactions that are illegal or contrary to the organizational charter, etc.
About the Insider List
The Central Bank of Russia is required to maintain a special register of persons who are insiders. As soon as a person receives the appropriate authority, information about him must be included in the list established by the Russian Central Bank.
Trade organizers also play an important role here.It is they who must transmit information about financial instruments, foreign currency or special goods to the Russian Bank. Failure to provide information, untimely provision of it or the transfer of incorrect information will entail the imposition of administrative responsibility.
Insider Information Limit Settings
Information of this type can be distributed and used only in a strictly limited circle of people. That is why the Federal Law "On insider information and market manipulation" sets forth a list of prohibitions on the use of the information provided. Here are some things to watch out for:
- transfer of information to another person - unless the other person is included in the register of insiders;
- by providing recommendations to outsiders, encouraging or obliging them to purchase, use, sell financial instruments, foreign currency, etc .;
- implementation of operations with financial instruments or goods related to insiders of third parties.
Separately, the law establishes a ban on the implementation of actions that may be attributed to market manipulation.
About the consequences of insider disclosure
The first and most important thing to note is the establishment by law of responsibility for the illegal dissemination of insider information. Any person, regardless of gender, status, worldview and other social elements, will be assigned the appropriate sanctions. The same applies to citizens or organizations that misused the information of the type in question, disseminated false information, manipulated the market, etc. Separately, it is worth pointing out the media, which are required to be responsible for disseminating information that is a verbatim reproduction of information that was previously contained in other sources.
Professional market participants who violate the law by someone’s order are not liable. In this case, the sanctions will not be imposed on the contractor, but on the person who gave the illegal order.
On the fight against the illegal dissemination of insider information
The Law “On Combating Market Manipulation” contains a number of provisions that would prevent, detect, suppress or completely eliminate the inconsistent dissemination of insider information. All relevant organizations and government bodies, as well as the Bank of Russia, should pay attention to the following standards:
- the need to develop, approve and use a special procedure for access to the type of information in question. Compliance with the requirements of confidentiality and supervision of compliance with these requirements.
- The creation of structural units whose responsibilities include protecting insiders.
- Providing conditions for effective and unhindered implementation by structural units of their duties.
Thus, there are not so many methods of struggle. However, the quality use of the measures presented will help to effectively protect information from the insider group.
On countering the unlawful use of insider information
The trade organizer is obliged to exercise strict control over the available insider information. In order to prevent and misuse the information of the type in question, the trade organizer must:
- To establish requirements for the identification and suppression of the unlawful use of insider information.
- Implement verification activities on non-standard transactions and applications. If there is a suspicion of market manipulation on a given order, then illegal actions will need to be prevented in a timely manner.
- Send notifications related to the identification of non-standard transactions to the Central Russian Bank.
What powers does a self-regulatory organization have in the area of the financial market? This is what the law indicates:
- Implementation of actions provided for by the internal documentation of the trade organizer. Actions can be aimed at preventing and suppressing violations of the rules established by the law in question.
- Requiring bidders and their employees to submit the necessary documentation, explanations, information, etc.
It is also worth noting that the Bank of Russia plays an important role in the entire system under consideration. Its functions and powers will be described below.
The role of the Bank of Russia
The Central Russian Bank is the main regulatory body of the state type in the system of combating market manipulation. It is this state authority that should provide effective supervision of the storage of any insider. What powers does the Bank of Russia have? This is what the law indicates:
- ensuring control over compliance with the rules enshrined in the federal law under consideration;
- identification and prevention of violations in the field of market manipulation and the use of insider information for illegal purposes;
- taking measures to prevent the illegal use of insiders;
- publication of regulatory acts in the field of its competence.
It is also worth noting that the Bank of Russia has the ability to conduct state inspections of authorities and instances, receive and verify complaints, demand that the authorities comply with the law, etc.
Information functions of the Bank of Russia
The Russian Central Bank is obliged to publicly disclose information about the following situations:
- suspension of the work of an organization, cancellation of a license, seizure of documentation for professional activities, etc .;
- the imposition of administrative penalties for the illegal use of information from an insider group, or criminal penalties for manipulating the market;
- sending orders to eliminate violations of the rules established by the Federal Law under consideration.
It is also worth noting that the Bank of Russia is able to independently transfer insider information to certain organizations.
The role of self-regulatory organizations
The Bank of Russia is far from the only controlling organization in this area. Non-state authorities - the so-called self-regulatory authorities - have a great influence on the storage and limited use of insiders. Here are the rights they have:
- control and oversight activities for compliance by members of the organization with established requirements;
- fulfillment of the organizer's instructions for checking non-standard orders;
- development in accordance with the Federal Law under review requirements for the participants of the organization, etc.
One concrete, though not quite standard, example of insider information is worth mentioning. We are talking about insider information about sports - little-known information for the convenience of betting. This kind of information is extremely relevant in our time. Usually, ordinary citizens use it. If we talk about insiders for legal entities, then everything is much more complicated. As a rule, this is a whole combination of the most diverse requirements, information and settings that should be kept secret from unauthorized persons.