Contents Detailed Contents List of Contributors List of Abbreviations xxix xxxi 1 Foundations of Capital Markets Legislature in Europe 1 History 1 I. Introduction 2 II. Segré Report (1966) 2 III. Phase 1: Coordination of Stock Exchange and Prospectus Laws (1979 1982) 3 IV. White Paper on Completing the Internal Market (1985) 4 V. Phase 2: Harmonisation of the Laws on Securities Markets (1988 1993) 4 VI. Financial Services Action Plan (1999) 5 VII. Lamfalussy Report (2000) 6 VIII. IX. Phase 3: Reorganisation of the Laws on Prospectuses and Securities (2003 2007) 7 Continuation of Phase 3: Harmonisation of the Right to Take Over (2004) 10 X. White Paper on Financial Services Policy (2005) 11 XI. The de Larosière Report (2009) 12 XII. Phase 4: Towards a European Supervision (since 2009) 12 XIII. Phase 5: Regulation of Credit Rating Agencies (2009 2012) 13 XIV. Continuation of Phase 5: Revision of the Framework Directives (since 2009) 13 XV. Continuation of Phase 5: Regulation on Short Sales (2012) 15 XVI. Continuation of Phase 5: Regulation on OTC Derivatives (2012) 15 XVII. Conclusion 16 2 Concept and Aims of Capital Markets Regulation 17 I. Concept 17 II. Regulatory Aims 18 1. Efficiency of Capital Markets 18 2. Regulatory Approaches 19 3 Legislative Powers for Regulating Capital Markets in Europe 20 I. Legal Foundations of the European Union 20 II. Rules on Competence 21 xi
1. Coordination of Provisions on the Protection of Shareholders and Creditors 21 2. Coordination of Start-Up and Pursuit of Self-Employment 22 3. Establishing an Internal Market 22 III. Legislative Instruments 23 1. Overview 23 2. Regulation 23 3. Directive 24 4 Process and Strategies of Capital Markets Regulation in Europe 25 I. Process of Capital Markets Regulation 27 1. Definition 27 (a) Market Regulation versus Market Supervision 27 (b) Capital Markets versus Financial Markets Regulation 28 2. European Legislation 28 (a) Legislation in the Lamfalussy Process from 2002 to 2010 29 (aa) Committees on Capital Markets Regulation 29 (1) European Securities Committee 29 (2) Committee of European Securities Regulators 29 (bb) The Legislative Process 30 (1) Level 1: Framework Directives 30 (2) Level 2: Implementing Measures 30 (3) Level 3: Guidelines and Recommendations 32 (4) Level 4: Supervision of the Enforcement by Member States 32 (cc) Evaluation 33 (b) The Lamfalussy II Process 33 (aa) The New Level 2 34 (bb) Criticism 35 (cc) Graph: Lamfalussy II Process 36 II. Strategies of Capital Markets Regulation 36 1. Minimum and Maximum Harmonisation 36 (a) Definitions 37 (b) Advantages and Disadvantages 38 (c) Tendency towards Maximum Harmonisation 38 2. Regulatory Concepts in the Member States 39 (a) Transformation of European Law 39 (b) Accompanying National Law 40 (c) The Principles-based Approach to Regulation in the United Kingdom 40 (aa) Foundations of Principles-based Regulation 40 (bb) Effects of Principles-based Regulation on Enforcement 41 (cc) Evaluation 41 (dd) Outlook 42 (d) Self-regulation 43 xii
5 Sources of Law and Principles of Interpretation 44 I. Sources of Law 44 1. European Law 44 (a) Framework Directives 44 (b) Takeover Directive 46 (c) Regulation on Credit Rating Agencies 46 (d) Regulation on Short Sellings 46 (e) Regulations on the European Supervisory Authorities 47 (f) Further Directives 47 2. National Laws of the Member States 48 (a) Austria 48 (b) France 48 (c) Germany 49 (d) Italy 50 (e) Spain 51 (f) Sweden 51 (g) United Kingdom 52 II. Interpretation 53 1. Importance of Interpretation 53 2. Principles of Statutory Interpretation 54 (a) Textual Interpretation 55 (b) Contextual Interpretation 55 (c) Historical Interpretation 56 (d) Teleological Interpretation 57 6 Challenges for Academic Research and Teaching 59 I. Capital Markets Law as a Topic of Legal Research 60 1. Intradisciplinarity 61 (a) Legal Nature 61 (b) Interpretation 62 (c) Coordination with other Areas of Company and Business Law 63 (aa) Accounting Law 64 (bb) Company Law 64 2. Homo oeconomicus or Behavioural Finance? 66 (a) Basic Assumption: Rationality 66 (b) Behavioural Anomalies 66 (aa) Bounded Rationality 66 (bb) Overconfidence 66 (cc) Fairness 67 (dd) Prospect Theory/Framing/Risk Aversity 67 (ee) Hindsight Bias 67 (ff) Representativeness/Availability/Salience 68 (c) Relevance of the Results of Behavioural Economics for Capital Markets Law 68 II. The Relevance of Capital Markets Law for University Teaching in Europe 69 III. Outlook 71 xiii
2 Basics of Capital Markets Law 7 Capital Markets 73 I. Overview 73 1. Trading Venue 73 2. Primary and Secondary Markets 75 3. Stock Exchanges 76 II. Regulated Capital Markets 77 1. Scope of Application of the Legislative Acts on Capital Markets Law 77 2. Definition 79 3. Market Segments 80 8 Financial Instruments 82 I. Introduction 82 II. Securities 83 1. Definitions in the Directives 83 2. Shares 83 3. Bonds 85 4. Derivatives 85 9 Market Participants 87 I. Introduction 87 II. Issuers 88 III. Investors 89 IV. Other Persons as Norm Addressees 91 10 Access to the Markets and Market Exit 93 I. Issuance of Shares 93 II. Admission to Trading of Shares 94 III. Market Exit 94 11 Capital Markets Supervision in Europe 96 I. Introduction 98 II. European Requirements 98 1. Institutional Organisation 98 2. Powers 99 (a) Minimum Powers 99 (b) Additional General Clauses 100 (c) Proposals for Reforms 100 III. National Organisation of Capital Markets Supervision 100 1. Institutional Concepts 101 (a) Model of Integrated Supervision 101 (b) Model of Sectoral Supervision 102 (c) Hybrid Models 103 (d) Distinction between Prudential Supervision and Conduct of Business Supervision 103 xiv
(e) Generally Preferrable Supervisory Model? 103 2. Internal Organisation 104 3. Administrative Powers 104 (a) Administrative Fines 104 (b) Other Administrative Measures 105 (c) Criminal Powers of Supervisory Authorities 106 4. Liability of Supervisory Authorities 106 5. Use of Resources and Sanctioning Activity 107 IV. Cooperation between the National Supervisory Institutions 107 1. Cooperation within the European Union 107 2. Cooperation with Third Countries 109 V. Competition between the National Supervisory Institutions 109 VI. The European Financial Supervisory Scheme 110 1. The European Financial Markets Supervisory System 110 (a) Macro-prudential Level 111 (b) Micro-prudential Level 111 2. The European Securities and Markets Authority (ESMA) 112 (a) Internal Organisation 112 (b) Independence 113 (c) Powers of Intervention towards the National Supervisory Authorities 113 (aa) Breaches of EU Law by the National Supervisory Authorities 114 (bb) Decisions on Emergency Situations and Disagreements 114 (1) Emergency Situation 115 (2) Disagreements between Competent Authorities in Cross-Border Situations 115 (3) National Fiscal Responsibilities Limit ESMA Powers 115 (d) Direct Supervision of the Market Participants 116 (aa) Warnings and Prohibition of Financial Activities 116 (bb) Supervision of Credit Rating Agencies 116 (e) Rule-Making Powers 117 (aa) Guidelines and Recommendations 117 (bb) Regulatory and Implementing Technical Standards 118 (1) Regulatory Technical Standards 119 (2) Implementing Technical Standards 120 (3) Assessment 120 (f) Judicial Review 121 (g) Liability 121 3. Conclusion 121 12 Sanctions 123 I. Introduction 124 II. Requirements in the European Directives on Capital Markets Law 125 1. Criminal and Administrative Sanctions 125 2. Civil Law Sanctions 126 III. National Sanctioning Systems 127 xv
1. France 127 2. Germany 128 3. Italy 129 4. Spain 129 5. Sweden 130 6. United Kingdom 131 IV. Conclusion 132 3 Market Integrity 13 Insider Dealing 133 I. Introduction 134 II. Regulatory Concepts 136 1. Requirements under European Law 136 (a) Prohibitions Laid Down by the Market Abuse Directive 136 (b) Accompanying Rules 138 (c) Reform 138 2. Implementation in the Member States 139 (a) Austria 139 (b) France 140 (c) Germany 140 (d) Italy 141 (e) Spain 142 (f) Sweden 142 (g) United Kingdom 143 III. Concept of Inside Information 144 1. Overview 144 2. Definition of Inside Information under European Law 145 (a) Information of a Precise Nature 145 (b) Potential Influence on the Price of Financial Instruments 148 (c) Reference to an Issuer of Financial Instruments 149 (d) Special Rules for Derivatives on Commodities and Front Running 150 3. Transposition in the Member States 151 (a) Overview 151 (b) Germany 151 (c) United Kingdom 154 IV. Prohibitions 156 1. Overview 156 2. Prohibition of the Acquisition or Disposal of Financial Instruments 156 (a) European Requirements 156 (b) Legal Practice in the Member States 157 (c) The ECJ s Interpretation and Conclusions for the Legal Practice in the Member States 158 3. Disclosure to another Person 159 (a) European Requirements 159 xvi
(b) Legal Practice in the Member States 161 4. Recommending or Inducing 162 (a) European Requirements 162 (b) Legal Practice in the Member States 162 5. Exemptions 163 V. Supervision 164 1. European Requirements 164 (a) Functions and Powers of the Authorities 164 (b) Insider Lists 164 (c) Notification Obligation 165 2. Legal Practice in the Member States 166 VI. Sanctions 167 1. Penalties and Fines 167 (a) Regulatory Techniques 168 (b) Legal Frameworks for Penalties and Fines 169 (c) Reform 170 2. Naming and Shaming 171 3. Investor Protection by Civil Liability 172 VII. Conclusion 172 14 Market Manipulation 174 I. Introduction 174 II. Regulatory Concepts 176 1. Requirements under European Law 176 2. Implementation in the Member States 177 III. Scope of Application 177 1. Personal Scope 177 2. Material Scope 178 IV. Prohibitions 179 1. Regulatory System 179 2. Core Definitions of Market Manipulation 179 (a) Information Based Manipulation 179 (aa) The Core Definition 179 (bb) Digression: Behavioural Finance 181 (b) Transaction-Based Manipulation 182 (aa) Core Definition and Signals 182 (bb) Exceptions 183 (1) Legitimate Reasons 184 (2) Accepted Market Practices 184 (c) Other Forms of Market Manipulation 185 3. Examples of Market Manipulation 185 (a) Dominant Market Position 185 (b) Transactions at the Close of the Market 186 (c) Abusing the Access to the Media 187 V. Safe-Harbour Rules 188 1. Introduction 188 2. Buy-Back Programmes 189 xvii
(a) Aim of the Programme 189 (b) Disclosure Obligations 190 (c) Trading Conditions 190 (d) Restrictions 190 3. Price Stabilisation 191 (a) Scope of Application 192 (b) Period of Stabilisation 192 (c) Disclosure and Organisational Obligations 193 (d) Ancillary Stabilisation 193 VI. Supervision 194 1. Supervisory Mechanisms 194 2. Investigatory Powers 194 VII. Sanctions 195 1. Requirements under European Law 195 2. Transposition in the Member States 196 (a) Criminal Sanctions 196 (b) Administrative Sanctions 197 (c) Investor Protection through Civil Liability 199 VIII. Conclusion 200 15 Short Selling 201 I. Introduction 201 II. Potential Risks and Benefits of Short Sales 202 1. Short Sales as a Means for Market Manipulation 203 2. Short Sales as a Means for Destabilising the Financial System 203 III. National Regulatory Concepts 203 IV. The EU Short Selling Regulation 204 1. Rules on Short Sales 204 (a) Prohibited Transactions 204 (b) Transparency Obligations 205 2. Rules on Credit Default Swap Agreements 205 3. Additional Powers of the National Authorities and the ESMA 206 4. Sanctions 207 V. Conclusion 207 4 Disclosure System 16 Foundations 209 I. Introduction 210 II. Transparency and Capital Market Efficiency 211 1. Allocational Efficiency 211 2. Institutional Efficiency 213 3. Operational Efficiency 213 III. Disclosure Provisions as Part of the Regulation of Capital Markets 214 1. The Importance of Legal Disclosure Provisions from an Economic Point of View 214 xviii
2. Disclosure Provisions as Part of Investor Protection 217 IV. Development of a Disclosure System in European Capital Markets Law 218 17 Prospectus Disclosure 220 I. Introduction 221 II. Regulatory Concepts 222 1. Requirements under European Law 222 (a) Requirements under the Prospectus Directive and Prospectus Regulation 223 (b) Supporting Rules 225 2. Implementation in the Member States 225 III. Drawing up a Prospectus 226 1. Scope of Application 226 2. Exemptions from the Obligation to Publish a Prospectus 227 (a) Exceptions for Certain Addressees, Offers or Securities 228 (b) Exemptions for Certain Issuances in Cases of Public Offers 228 (c) Exemptions for Certain Issuances for the Admission to the Regulated Market 229 (d) Supplements 229 3. Content, Format and Structure of a Prospectus 230 (a) General Rules 230 (b) Format of the Prospectus 230 (aa) Single or Separate Documents and Base Prospectus 230 (bb) Summary 231 (cc) Incorporation by Reference 233 (c) Distinction between Different Security Constructions 233 (d) Language of the Prospectus 234 (e) Annual Document 234 IV. Sanctions 235 1. Requirements under European Law 235 2. Supervisory Measures 236 (a) Suspension or Prohibition of an Offer 236 (b) Fines 236 3. Sanctions under Criminal Law 237 4. Sanctions under Civil Law 237 (a) Deficiencies of the Prospectus 237 (b) Claimant and Opposing Party 239 (c) Causation 240 (d) Responsibility 241 (e) Legal Consequences 242 V. Conclusion 243 18 Periodic Disclosure 244 I. Introduction 245 1. Development of a System of Periodic Disclosure 245 2. Financial Accounting Information as the Basis of Financial Reporting 247 xix
II. Regulatory Concepts 248 1. Requirements under European Law 248 (a) Transparency Directive 248 (b) Correlation with European Accounting Law as a Reflection of the Dualistic Regulatory Concept 249 (c) Addressee of the Disclosure Obligation 250 2. Implementation in the Member States 250 (a) France 250 (b) Germany 251 (c) Italy 251 (d) Spain 251 (e) Sweden 252 (f) United Kingdom 252 III. Annual Financial Report 252 1. Overview 252 2. Financial Accounting Information 254 (a) Consolidated and Individual Accounts 254 (b) Management Report 256 IV. Half-yearly Financial Reports 256 1. Overview 256 2. Financial Accounting Information 257 (a) Consolidated and Individual Accounts 257 (b) Interim Management Report 258 (c) Auditing of the Half-yearly Financial Report 258 V. Quarterly Financial Report and Interim Management Statement 259 1. Overview 259 2. Content of Interim Management Statements 260 3. Quarterly Financial Report 261 VI. Disclosure Procedures 262 VII. Sanctions 264 1. Liability for Incorrect Financial Reporting 264 (a) Specific Liability for Incorrect Financial Reporting 264 (b) Liability under the General Civil Law Rules 265 2. Sanctions under Criminal and Administrative Law 267 VIII. Conclusion 268 19 Disclosure of Inside Information 270 I. Introduction 272 1. Dual Function of Ad Hoc Disclosure Obligations 272 2. Practical Relevance 273 II. Regulatory Concepts 274 1. Requirements under European Law 274 2. Implementation in the Member States 276 (a) Germany 276 (b) Austria 277 (c) Sweden 277 (d) France and Spain 278 xx
(e) Italy 278 (f) United Kingdom 278 III. Obligation to Disclose Inside Information 279 1. Addressees 279 (a) Issuers of Financial Instruments 279 (b) Persons Acting on Behalf or on Account of the Issuer 279 (c) Companies Controlled by the Issuer 280 2. Relevant Information 280 (a) Foundations 280 (b) Information Directly Concerning the Issuer 282 (c) Future Circumstances 283 (d) Corporate Group Constellations 284 (e) Relationship to Other Disclosure Rules 285 3. No Offsetting of Information 287 4. Prohibition to Disclose Other Information 287 5. Publication Procedure 288 IV. Delay in Disclosure 288 1. Foundations 288 2. Legitimate Interests 290 (a) Requirements under European Law 290 (b) Legal Practice in the Member States 291 (aa) Attempts at a Dogmatic Approach 291 (bb) Further Constellations 293 (cc) Multi-Stage Decision-Making Processes 294 3. No Misleading the Public 295 4. Ensuring Confidentiality 296 5. Conscious Decision by the Issuer? 297 V. Sanctions 299 1. Importance of National Legal Traditions 299 2. Civil Liability 299 (a) Germany 299 (b) Other Member States 303 3. Administrative Sanctions 305 (a) Fines 305 (aa) Germany 305 (bb) France 306 (b) Naming and Shaming 307 (c) Further Administrative Sanctions 307 4. Criminal Law 308 VI. Supervision 308 VII. Conclusion 309 20 Transparency of Major Shareholdings and Financial Instruments 310 I. Introduction 312 II. European Concepts of Regulation 314 1. Requirements under European Law 314 (a) Foundations 314 xxi
(b) Scope of Application and Regulatory Powers 315 (c) Disclosure Obligations 315 (d) Further Disclosure Requirements 316 (e) Reform 316 2. Implementation in the Member States 317 III. Notification Obligations on Changes in Voting Rights 318 1. Prerequisites 318 (a) Procedures Subject to Notification 318 (b) Thresholds 319 (c) Exemptions from the Notification Obligation 320 2. Legal Consequences 321 (a) Notification 321 (b) Publication 321 3. Attribution of Voting Rights 322 (a) Regulatory Concepts 322 (b) Cases of an Attribution of Voting Rights 323 (aa) Acting in Concert 323 (1) Legal Practice in France 324 (2) Legal Practice in Germany 325 (3) Legal Practice in Italy 327 (4) Legal Practice in Spain 328 (bb) Temporary Transfer of Voting Rights 328 (cc) Notification Obligations of the Secured Party 329 (dd) Life Interest 329 (ee) Voting Rights Held or Exercised by a Controlled Undertaking 329 (ff) Deposited Shares 331 (gg) Shares Held on Behalf of Another Person 331 (hh) Voting Rights Exercised by Proxy 333 (c) Exceptions 333 4. Supervision 333 5. Sanctions 334 (a) Administrative Fines 335 (b) Loss of Rights 335 (c) Investor Protection by Means of Civil Liability 336 IV. Notification Requirements when Holding Financial Instruments 337 1. Prerequisites 337 2. Legal Consequences 338 3. Sanctions 338 4. Reform 339 (a) United Kingdom 339 (b) Germany 339 (c) France 342 (d) Europe 343 V. Notification of Intent 344 1. France 344 2. Germany 345 xxii
3. Reforms at European level 346 VI. Conclusion 346 21 Directors Dealings 348 I. Introduction 348 II. Regulatory Concepts 350 1. Requirements under European Law 350 (a) Legal Foundation 350 (b) Additional Disclosure Rules 351 2. Implementation in the Member States 351 III. Notification Requirements 352 1. Prerequisites 352 (a) Persons Subject to the Notification Obligation 352 (b) Transactions Subject to the Notification Requirements 353 2. Legal Consequences 353 (a) European Requirements on Notification and Publication 353 (b) Legal Practice in the Member States 354 IV. Supervision and Sanctions 355 1. Requirements Laid Down by the Market Abuse Directive 355 2. Fines and Criminal Sanctions 355 3. Forfeiture of Profits 356 4. Civil Liability 357 V. Conclusion 357 22 Access to Information 358 I. Requirements under European Law 358 II. Implementation in the Member States 359 1. Germany 359 2. United Kingdom 359 III. Reform 360 23 Disclosure of Information Necessary for Shareholders to Exercise their Rights 361 I. Introduction 361 II. Regulatory Concepts 361 III. Disclosure of Changes in the Rights Attached to Shares 362 IV. Disclosure of Information Necessary for Exercising Rights 363 1. Information Necessary for Shareholders 363 2. Information Necessary for the Holders of Debt Securities 363 V. Conclusion 364 24 Disclosure Obligations in Takeover Law 365 I. Introduction 366 II. Transparency Regarding Defensive Structures and Mechanisms 367 1. Regulatory Aims 367 2. Transparency Requirements 367 (a) Structure of the Capital 368 (b) Restrictions Regarding the Transfer of Shares 368 xxiii
(c) Significant Shareholdings 368 (d) Holders of Special Rights 369 (e) System of Control for Employee Share Schemes 370 (f) Restrictions on Voting Rights 370 (g) Agreements between Shareholders 370 (h) Provisions on the Appointment and Replacement of Board Members 371 (i) Powers of Board Members to Issue and Buy Back Shares 371 (j) Change of Control Clauses 372 (k) Compensation Agreements 372 III. Obligation to Disclose Bids 372 1. Types of Bids 372 2. Decision to Launch a Bid 373 3. Offer Document 374 IV. Mandatory Bid 375 1. Legal Foundations and Aims 375 2. Control 376 3. Gaining Control by Acting in Concert 377 (a) Legal Foundations 377 (b) Legal Practice in the Member States 378 (aa) Sacyr/Eiffage (France) 378 (bb) WMF (Germany) 379 V. Conclusion 381 5 Intermediaries 25 Investment Firms 383 I. Introduction 383 II. Investment Advisory Services 384 1. Definition 384 2. Obligations of Investment Firms 385 (a) Exploration and Assessment of the Suitability of an Investment 385 (b) Information Obligations 386 3. Supervision 386 4. Sanctions 386 III. Conclusion 387 26 Financial Analysts 389 I. Introduction 389 II. Types of Financial Analysts 391 III. Regulatory Concepts 392 1. Requirements under European Law 392 2. Implementation in the Member States 393 IV. Specific Regulation of Financial Analysts 393 1. Definition of Research Concerning Financial Instruments 393 (a) Recommending an Investment Strategy 394 xxiv
(b) Relevant Person 395 2. Fair Presentation of Investment Recommendations 396 (a) General Requirements 396 (b) Special Requirements for Certain Persons 397 3. Disclosure Obligations 397 (a) Identity of the Producer of Investment Recommendations 398 (b) Actual and Potential Conflicts of Interest 398 (aa) General Provisions 398 (bb) Special Requirements for Certain Persons 398 (1) Obligation to Disclose Certain Conflicts of Interest 398 (2) Further Disclosure Obligations 400 4. Dissemination of Investment Recommendations Produced by Third Parties 401 (a) General Requirements 401 (b) Additional Obligations for Certain Persons 402 5. Principle of Proportionality 402 6. Sanctions 404 (a) Requirements under European Law 404 (b) Germany 404 (c) United Kingdom 405 V. Relevance of the General Rules of Conduct for Financial Analysts 405 1. Market Manipulation 405 (a) Information-Based Manipulation 405 (b) Fictitious Devices or Any Other Form of Deception or Contrivance 406 (c) Scalping 407 (d) Effects of Implementing Directive 2003/125/EC on the Definition of Market Manipulation 408 2. Prohibition of Insider Dealings 408 3. Organisational Requirements 409 (a) General Organisational Requirements 409 (b) Special Organisational Requirements 411 VI. Conclusion 412 27 Rating Agencies 413 I. Introduction 413 1. Aims of Rating 414 2. Effects of a Rating 415 3. Market Structure and Development of Regulation in Europe 415 II. Regulatory Concepts 416 III. Scope of Application 417 1. Subject Matter of Regulation 417 2. Scope 418 3. Definitions 418 IV. Regulatory Approach and Obligations 419 1. Avoidance of Conflicts of Interest 419 (a) Independence of Credit Rating Agencies 419 xxv
(b) Persons Involved in the Rating Procedure 421 2. Improvement of the Quality of Ratings 422 3. Transparency Obligations 423 (a) Disclosure and Presentation of Credit Ratings 423 (b) Transparency Report 424 4. Registration 424 5. The Commission Proposals of November 2011 425 V. Supervision 426 1. Foundations 426 2. Procedure 427 VI. Measures and Sanctions 427 1. Administrative Instruments 427 2. Criminal Measures 428 3. Civil Law Liability 428 (a) Legal Situation in the Member States 429 (b) Proposal for a European Civil Liability 430 VII. Conclusion 430 6 Compliance in Investment Firms 28 Foundations 431 I. Compliance 432 II. Relationship between Compliance and Risk Management 432 III. Developments and Legal Foundations 433 29 Organisational Requirements 436 I. Regulatory Concepts in European Law 437 1. Overview 437 2. Principles-based Approach to Regulation 438 3. Regulatory Aim 442 II. Implementation in the Member States 443 1. France 443 2. Germany 443 3. Italy 444 4. Spain 444 5. Sweden 445 6. United Kingdom 445 III. Regulatory Objectives and Scope of Compliance Obligations 446 1. Mitigation of Compliance Risk 446 2. Scope of the Compliance Obligation 448 IV. Elements of a Compliance Organisation 449 1. Compliance Function 449 (a) Requirements 450 (aa) Independence 450 (1) Operational and Financial Independence 450 (2) Organisational Independence 451 xxvi
(bb) Permanence and Effectiveness 453 (b) Responsibilities 453 (aa) Monitoring and Assessment 454 (bb) Advice and Assistance 454 2. Compliance Officer 455 (a) Appointment 455 (aa) Registration and Qualification Requirements 455 (bb) Appointment of Members of Senior Management as Compliance Officers 457 (b) Legal Status 457 (aa) Independence towards Senior Management 457 (bb) Disciplinarian Independence and Protection against Dismissal 459 (c) Responsibilities and Powers 459 (aa) Informational Rights and the Right to Issue Instructions 459 (bb) Compliance Reporting 461 (1) Internal Reporting 461 (2) External Reports 462 3. Chinese Walls 462 (a) Legal Foundations 463 (b) Elements 464 (aa) Segregation of Confidential Areas 465 (bb) Watch Lists and Restricted Lists 466 (c) Legal Effects 467 V. Sanctions 468 1. Sanctions against Investment Firms 469 2. Sanctions against the Senior Management and the Compliance Officer 470 VI. Conclusion 471 7 Conclusion 30 A Review of the Past and Suggestions for the Future 473 I. Topics for Final Consideration 473 II. Capital Markets Law(s) in Europe or European Capital Markets Law? 474 1. Degree of Existing Provisions 474 2. Consistent Application of Law 475 3. Supervision and Sanctions 476 4. Conclusions 477 III. Prospects and Challenges 478 1. Reorganisation of the European Sources of Capital Markets Law 478 2. Regulatory Concepts Regarding Enforcement and Sanctions 480 3. Legislation 2015: Stronger Influence of Legal Knowledge 481 xxvii
Bibliography 483 Subject Index 487 Index of National Laws 499 Index of National Laws by Country 505 Index of Supervisory and Court Rulings 511 xxviii