Within the EU, there is an obligation for persons discharging managerial responsibilities in market-listed companies and persons or companies closely associated with them, to notify transactions which pertain to financial instruments issued by the company. Such notice must be given to a competent authority promptly and no later than three business days after the transaction was made. If this is not done, the competent authority, which in Sweden is the Swedish Financial Supervisory Authority, can decide on intervention through, among other things, pecuniary sanctions. The Swedish Financial Supervisory Authority has produced guidelines for determining the amount of the pecuniary sanctions.
The Swedish Financial Supervisory Authority may refrain from intervention, inter alia, where the infringement is minor or excusable or special cause otherwise exists.
The case in the Supreme Administrative Court concerned a situation where an individual (AA) discharging managerial responsibilities and his wholly owned company had sold shares, each for approximately SEK 24 million, i.e. a total of approximately SEK 48 million. The transaction was published in a press release on the same day and, on the day thereafter, AA issued a so-called flagging notification. Five business days after the transaction was made AA notified the entire transaction to the Swedish Financial Supervisory Authority. About three months after the transaction, AA corrected the notice in such a manner that he stated that half of the shares had been sold by him and the other half by the company. On the same day, the company’s sale of the shares was notified.
The Swedish Financial Supervisory Authority took a decision to impose on AA and the company pecuniary sanctions in the amount of SEK 2,837,000 and SEK 5,400,000 respectively. The amounts were determined based on the Swedish Financial Supervisory Authority’s guidelines for pecuniary sanctions.
The questions that the Supreme Administrative Court addressed in the case was whether there was cause to refrain from imposing pecuniary sanctions and, if such is not the case, in which manner the amount of the sanctions is to be determined.
Read the judgment here: