Russian Union of Industrialists and entrepreneurs (RSPP) criticized the impending amendments to the law on insider dealing, providing an open list of insider information for issuers and financial institutions, as well as granting employees of the Bank of Russia the right to freely access premises of legal entities and check their computers.
The head of RSPP Alexander Shokhin sent the letter with the position of the business the Chairman of the Duma Committee on financial markets Anatoly Aksakov.
Unhindered access of the CB to the office
The document notes that the provision of the employees of the Central Bank the right of unimpeded access to premises of the audited entities and their computers actually means empowering the Bank of Russia with powers of a law enforcement Agency. This bill does not contain provisions on the introduction of any form of judicial control over the withdrawal of documents and information in the course of inspections. Using the new rights under the bill, employees of Bank will receive unlimited access to commercial and service secrets, as well as personal data. While under Russian law, even law enforcement officers are unable to access such information without first obtaining a judicial decision.
In RSPP believe that the empowerment of the employees of the regulator not only creates the preconditions for corruption in the implementation of verification activities, but may significantly hamper the activities of companies.
To protect the rights and interests of companies, as well as to prevent possible abuses of the RSPP proposes to provide in the bill an exhaustive list of grounds for inspections, and to establish the responsibility of the Bank of Russia for the damage to or destruction of equipment and information that were made by employees as a result of inspections.
On the criteria of insider information
Business against the transfer of the regulation of the issue of insider trading, with Federal laws on the level of normative acts of the Central Bank. The bill gives the Bank of Russia the right to determine in each case whether insider information not included in the list.
The letter notes that the insider may admit any information, whose appearance was preceded by a significant change in prices of financial instruments, currencies or commodities. However, the reasons for significant changes in the prices of financial instruments can be such circumstances, information about which not always could obviously be indicative of the possibility of such consequences, that is, the owners of this information could not perceive it as an insider.
Unlimited powers of the Central Bank
Thus the bill lacks not only a description of a mechanism to challenge the decision of the Bank of Russia on the acceptance of any insider information, but the assumption of this possibility in principle. Thus, it is expected that the Bank of Russia will independently develop criteria for classifying information as insider, he will become to use them (to change, to interpret) in the manner developed by the Bath of Russia, including through the consideration of cases on administrative offences in this sphere.
“Empowering the Bank of Russia unlimited amount of power together with the absence of a legislated list of insider information creates significant risks of corruption, and in addition, will lead to arbitrary enforcement and the formation of a contradictory judicial practice,” the letter said Shokhin.
In addition, in accordance with the current law of insider, information is classified as insider obliges the Issuer to disclose on the website. The bill provided for delegation to the Bank of Russia of new powers that will allow the regulator to be attributed to insider information some of the information could hurt the companies.
For example, the Central Bank can recognize insider and accordingly be required to disclose information, which is under sanctions from the US and the EU could be used to strengthen the sanctions pressure. The amendments are contrary to the law restricting the disclosure of corporate data that can be used for tougher sanctions.
Shokhin asked to consider the position of the RSPP in the work on the bill.
The danger of manipulation
The bill on amendments of the law on insider dealing also considered the Commission RSPP in the media industry, and entrepreneurship in the information sphere. In conclusion, the Commission stated that serious concerns of the media causes the envisaged bill, the Central Bank of the Russian Federation of powers on approval of the list of actions in addition to those in the law of insider can be recognized by action for market manipulation.
Under current law, in relation to the activities of the media only a part of manipulation is the intentional dissemination of false information that had an impact on the market. In order to avoid disproportionate disruption consequences provided for limitations of liability of editors, journalists and other staff, as well as legal entities engaged in the manufacture, production or distribution of media products, even for cases where the spread of false information had taken place, but it was the actions of some unscrupulous individuals.
Media coverage of socially important issues, in connection with than almost any of the publications may have an impact on the market, including, for example, forecasts or analyst. The extension of the powers of the Bank of Russia can lead to the fact that manipulation can be considered a new action for the production or distribution of media products to which terms of limitation of liability will not apply. Claim the full amount of damages specified in the law, will inevitably lead to the destruction and closure of media outlets.
The Commission considers it important to preserve the current order in which the activities of the media and perhaps a prosecution for manipulation only in the case of deliberate dissemination of false information that had an impact on the market, with conditions and limitations on such liability.
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