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Italy: EU Regulation on the Abuse of Markets Implemented

(Jan. 15, 2019) On September 29, 2018, new legislation implementing an EU regulation concerning the abuse of markets entered into force in Italy. (Legislative Decree No. 107 of August 10, 2018, Provisions Adapting Domestic Legislation to the Provisions of EU Regulation No. 596/2014 on the Abuse of Markets and Repealing Directives 2003/6/CE, 2003/124/UE, 2003/125/CE and 2004/72/CE) (L.D. No. 107), GAZZETTA UFFICIALE (G.U.), Sept. 14, 2018, G.U. website (in Italian).)

Increased Information Obligations of Listed Issuers and Their Subsidiaries

The new legislation increases the powers of the National Commission for Companies and Stock Exchanges (Commissione Nazionale per le Soccieta’ e la Borsa, CONSOB) by establishing, among other provisions, that issuers trading securities of units of closed-end funds must now provide the regulated information to CONSOB as well as to other market operators. (L.D. No. 107, art. 3(5)(b).) Listed issuers must also communicate to the public, without delay, certain privileged information directly related to such issuers and their subsidiaries as provided in EU Regulation No. 596/2014 according to the respective technical norms established by the European Commission. (Id. art. 3(6)(a).) Listed issuers must also ensure that their subsidiaries provide all the necessary information to comply with their obligations as set forth in EU Regulation No. 596/2014. (Id. art. 3(6)(c).)

Reinforced Reporting Obligations of Shareholders

The new law provides that any shareholder holding shares equal to at least 10% of the social capital of a company or anyone controlling the listed issuer must notify CONSOB and the public of any transactions related to shares issued by the issuer or of other financial instruments issued by their intermediaries, or other persons directly connected to them. (Id. art. 3(6)(e).)

Broadening the Scope of Reporting Obligations

Under the new legislation, in order to guarantee that the public be properly informed, CONSOB may request the publication of investment recommendations and other information related to investment recommendations by listed issuers and other subjects under their control. (Id. art. 3(6)(g).) CONSOB must approve regulations establishing the criteria for identifying issuers of financial instruments that, although not listed on Italian regulated markets, are widely distributed among the public. (Id. art. 3(10)(a).)

New Administrative Penalties

New administrative penalties are imposed for violating the prohibition on abusing privileged information and unlawfully communicating privileged information, as provided in EU Regulation No. 596/2014. (Id. art. 4(9)(b).) These sanctions are increased up to triple or up to the highest amount of ten times the profit obtained or losses avoided as a result of the offense. (Id. art. 4(9)(d).)

Additional Penalties for Recividism

When the perpetrator of a crime has already committed any of the offenses set forth in the law one or more times during the last ten years, whether with criminal intent or out of negligence, the law also imposes the administrative penalty of permanent interdiction for any position involving the administration, management, or control of the respective institution where the offense was committed. (Id. art. 4(11)(12)(d).)

Recividism for other offenses is punished by a temporary interdiction from participating in the conclusion of operations of the respective company, or by an order to repurchase as a direct result of financial instruments, during a period not to exceed three years. (Id. art. 4(11)(12)(f).)