The Securities Litigation Review: France


i Sources of law

For decades, French securities laws have been passed pursuant to, or modified in accordance with, European directives or regulations.2 EU Member States have been required since 1989 to prohibit insider trading and empower an administrative authority to enforce such prohibition, to which the Market Abuse Directive (MAD) added 'market manipulation' in 2003.3 The MAD was replaced in 2016 by the Market Abuse Regulation (MAR), which extended its scope to non-regulated markets and imposed minimum levels of applicable fines.4 In addition, pursuant to a new Market Abuse Directive (MAD II),5 EU Member States had to make market abuse a criminal offence.

Pursuant to the MAR, any person6 qualifies as an insider as soon as they possess 'inside information', namely information relating to one or more issuers or to one or more financial instruments7 that is precise,8 non-public and likely to have a significant effect on the price of those financial instruments or related derivatives. Insiders are prohibited from using9 that information by acquiring or disposing of the relevant securities or related derivatives, on their own account or on behalf of a third party, either directly or indirectly. They are also prohibited from disclosing the information to any person (except for legitimate professional purposes) as well as from recommending or inducing any person to trade on the relevant securities.10

The prohibition of 'market manipulation' is twofold. It includes share price manipulation, namely transactions or orders to trade that give false or misleading signals as to the supply of, demand for or price of listed securities, or that secure their price at an abnormal or artificial level, as well as transactions or orders to trade that employ fictitious devices or any other form of deception or contrivance. It also includes the dissemination of false or misleading information with respect to listed securities by any person who knew (or should have known) that the information was false.11

The EU also adopted a number of other directives and regulations that are relevant to securities litigation, notably the Transparency Directive,12 the Takeover Directive,13 the Markets in Financial Instruments Directive and Regulation (MiFID II14 and MiFIR),15 which were adopted for the purpose of strengthening financial markets' efficiency, resilience and transparency by regulating more types of securities and areas of broker conduct, and the Prospectus Regulation,16 which was adopted to ease information requirements for small and medium-sized enterprises and frequent issuers of securities. The EU also adopted the Sustainable Finance Disclosure Regulation, which aims to channel private investment towards sustainable investing, while avoiding 'greenwashing'.17

Extensive disclosure obligations are imposed on issuers and their representatives, be they upon the issuance of securities or afterwards. In addition to periodic financial disclosure requirements, the issuers must immediately disclose to the market any inside information (as defined above)18 relating to their own securities; they may, however, delay disclosure to avoid prejudicing their legitimate interests if the delay is not likely to mislead the public and the issuer is able to ensure the confidentiality of the corresponding information.19

The European Court of Justice (ECJ) has jurisdiction to interpret EU rules by issuing preliminary rulings, if requested by national courts. Another major protagonist is the European Securities and Markets Authority (ESMA), which is empowered to implement technical standards (after conducting, in some cases, market consultations)20 or take specific measures if authorised by a directive or regulation.21 The ESMA also provides soft law guidance that addresses practical complexities related to the European directives and regulations22 and is granted the power to prosecute and fine rating agencies for matters of internal governance, internal control and record-keeping failings.23

Although EU law forms much of the relevant French law and regulation, French law continues to have its particularities. Provisions of the EU directives have been implemented under French law, including in the General Regulation of the French stock markets regulator, the Financial Markets Authority (AMF). In addition, the AMF provides soft law guidance and the decisions of its Enforcement Committee as well as court precedents are a significant source of law. Finally, legal doctrine tends to play a more significant role than in other jurisdictions.

For instance, French law complements EU rules by requiring any person preparing a financial transaction relating to an issuer to immediately inform the market, unless the confidentiality of the information can be ensured,24 and by imposing enhanced transparency requirements during public tender offers.25 It also requires disclosure of certain shareholders' agreements26 and provides for a series of sanctions in the event of failure to disclose the crossing by security holders of certain ownership thresholds.27 Also, AMF guidelines have further specified EU rules on immediate disclosure of inside information.28

ii Regulatory authorities

The AMF has been empowered by French statute to investigate market abuse and other infringements to its General Regulation, and impose financial penalties. It was created in 2003 as an independent administrative organisation run by a board of 16 members, a majority of whom are appointed based on their financial and legal expertise. The board will initiate both the investigation and prosecution (and may offer a settlement procedure; see Section III.iii), while the financial penalties are imposed by the independent Enforcement Committee of 12 distinct members (four judges, six people appointed for their financial and legal expertise and two representatives of employees of the financial industry).

Insider trading and market manipulation are also criminal offences under French law.29 The Public Prosecutor for Financial Matters and the Paris Criminal Court have exclusive jurisdiction for such offences.30 The Prosecutor may initiate an investigation either spontaneously, on the basis of any complaint lodged by anyone, or following the transmission by the AMF of its investigation report. The matter may then be referred to the Criminal Court for trial, which will be held before three judges and without a jury. Victims of the offence may participate in the trial and seek to be awarded damages.

For years, the French Constitutional Court has ruled that one could be both fined by the AMF Enforcement Committee and convicted for the same facts by the Paris Criminal Court. However, under the influence of the European Court of Human Rights,31 in March 2015, the French Constitutional Court overruled its earlier decision in this respect (see Section III.i).32

iii Common securities claims

Pursuant to French law, any third party who suffered a loss as a result of a market abuse or any other breach of applicable laws (even if the infringement has not been investigated or fined by the AMF)33 has a right to be compensated by the person who committed the abuse.34 If a contract exists between them, the victim's rights to indemnification will be governed by the contract unless the injury results in the contract (or its provisions regarding liability) being held null and void by a competent court.

Victims cannot be awarded damages by the AMF.35 They may either intervene in the criminal proceeding and seek damages in the trial (if any) or sue the infringing party before civil courts. This second option, however, is facilitated by the infringement having been investigated by the AMF because the French procedural system does not allow for discovery procedure and therefore makes it difficult for plaintiffs to prove their case in a civil court.

In the absence of any market abuse or other breach of applicable laws, investors that have suffered a loss in relation to securities may also seek to be indemnified by their financial intermediary for breach of their duty to warn them about the risks associated with the security. This duty is highly dependent on the sophistication of the client and the damage incurred would, in any case, be considered on the basis of lost opportunity.36 For that kind of claim, a class action is available to the clients of the financial intermediary, since 2014.37

Finally, attorneys' fee awards have, for a long time, been de minimis in France. Some courts have recently started awarding higher amounts,38 but they remain very variable from one case to another and are unrelated to the actual fees.

Private enforcement

i Forms of action

As a preliminary remark, even if French courts have admitted that all forms of market abuse (including insider trading)39 may result in damages for investors, all case law relating to the indemnification of investors until now has related to the dissemination of false or misleading information. Consequently, we focus on that particular infringement in this section.

Victims of market abuse have two main procedural routes to prove their case and seek indemnification. They may participate in the criminal proceeding and the Paris Criminal Court can rule on both the criminal conviction and the damages to be awarded to any person having incurred a loss directly resulting from the offence (see Section III). Victims can also initiate civil action to recover damages, especially from the persons that were held responsible for an infringement by the AMF.

A statutory provision allows the AMF to transmit, upon request, its investigation report to a civil court before which an indemnification claim is pending.40 The AMF's investigation report may indeed allow investors to be indemnified by executives or third parties (or the issuer itself) that were investigated but not fined by the AMF. They could allege, for example, that the standard applicable to a breach of duty in a civil lawsuit is less stringent (mere negligence would suffice) than in a market abuse case (which requires violation, be it intentional or not, of applicable laws and regulations).

Even without access to its investigation file, the consequences of the AMF's decisions can go beyond the persons fined for market abuse. For instance, a civil court ordered an issuer to indemnify investors because it resulted from a decision of the stock markets regulator that the issuer was in possession of (positive) material non-public information when making the (pessimistic) press release that had led the investors to sell their shares.41 In another case, plaintiffs have successfully claimed damages against several directors of the issuer even though only the CEO had been fined by the AMF.42

If the infringement is attributable to the issuer, investors may initiate action against the issuer or its officers or directors, who can under certain circumstances be held responsible for the infringement. The issuer itself may also seek to receive damages from its (former) management, either for its own direct loss (such as a reputational loss) or from the damages paid by the issuer to plaintiffs (recourse action);43 such an action may be initiated either by the issuer's (new) officers, or by its shareholders exercising a derivative action on behalf of the issuer.

The dissemination of false or misleading information may also be attributable to persons other than the issuer or its officers, either because those persons were involved in, and have contributed to, the dissemination of false or misleading information by an issuer (such as auditors) or because they acted independently (analysts, journalists, bloggers or any other person). Investors in the affected securities and the issuer may seek to be indemnified by those persons.

On the other hand, the French Supreme Court clarified that the dissemination of false or misleading information can only constitute market abuse and lead to indemnification insofar as it relates to publicly traded securities.44

There is still no class action available with respect to market abuse cases45 despite long-standing lobbying to this effect, including by the AMF itself.46 A European directive enabling investors to initiate a class action in financial matters was adopted on 25 November 2020, but only covers specific financial European regulations (such as the Prospectus Regulation), not market abuse infringements,47 which legal scholars have criticised.48 Therefore, shareholders must act individually, either alone or along with other investors. However, the Financial and Monetary Code49 allows certain associations to claim damages for a market abuse infringement on behalf of the investors by whom they have been appointed for that purpose. These associations may not advertise, in any manner, their action and solicit additional mandates, unless authorised to do so by a judicial order.50 In addition, when several shareholders of a corporation act against its officers or directors, they are entitled to appoint one of them to act on their behalf.51

ii Procedure

The court will vary in nature and location; commercial or civil courts may have jurisdiction. In addition, the plaintiff may file its claim either before the courts situated where the defendant is domiciled (or has its headquarters), where the infringement took place or where the loss was incurred.

In French civil proceedings, each party must prove its case based on the documents available to it, with limited access to documents in the other parties' possession. Even though the judge is theoretically entitled to order that the parties produce any document relevant to the case,52 in practice, he or she will rarely do so. The most efficient way to obtain documents in the possession of the other party is to initiate a specific proceeding for the sole purpose of collecting evidence in view of a future claim.53 The proceeding must take place before filing the indemnification claim and, if successful, will typically lead to the appointment of a bailiff entitled to access the defendant's premises and collect relevant documents.

French civil proceedings rarely rely on witnesses' written statements or oral testimonies. Therefore, the procedure will essentially allow the parties to exchange written pleadings and pieces of evidence, and, in the end, present their argument orally before the court. A standard first instance proceeding lasts for 18–24 months. An appeal would last approximately the same, with the court of appeal reviewing the whole case, from both a factual and a legal point of view. In the event of a second appeal, the Supreme Court would rule on the legal aspects of the case only, within approximately 18–24 months.

iii Settlements

Even though the court may suggest that the parties attempt to find an amicable solution, and even organise (with the parties' agreement) mediation or conciliation, the settlement of a civil claim does not require any judicial involvement or review. The only specific requirement for a valid settlement under French law is that it provides for mutual concessions.

iv Damages and remedies

Although case law was initially unclear regarding this issue, it now considers that the only consequence of a dissemination of false or misleading information is a loss of opportunity for the investors to make a better investment.54 As a result, the indemnity awarded to the investors will only represent a portion of their damage, interfering with the legal principle of full indemnification of the loss. In addition, instead of assessing the loss of opportunity on a case-by-case basis, French courts tend to award the same indemnity per share to all plaintiffs55 or to broad categories of plaintiffs.56

This approach has been widely criticised, essentially because dissemination of false information only results in a loss of opportunity in specific circumstances (e.g., when the investor actually made an investment choice taking the false information into account). The same commentators further argue that investors having invested in the securities between the dissemination of false positive information and the corrective statement (or having divested in the same period in the case of false negative information) incurred a certain and direct loss, which should be entirely indemnified. According to those commentators, that loss is equal to the effect that the information had on the share price, which can be precisely quantified through an event study.57

However, the Paris Civil Court recently reaffirmed its approach and held that only the loss of an opportunity to make a decision based on accurate information can be indemnified.58

From a practical point of view, it may also seem difficult for plaintiffs to prove that the false or misleading information played a causal role in their investment decisions.59 Nevertheless, in a 2014 decision, the French Supreme Court seemed to accept that this causal link be presumed, which should theoretically encourage the civil litigation of market abuses.60 Moreover, it is not necessary for the plaintiff to prove that the false or misleading information was likely to affect the price of the securities.61

On the whole, most authors note that the handling of stock market litigation still appears both complex and partly ineffective in France, because it does not ensure proper compensation for the harm suffered by investors.62 Many have called in this respect for the creation of a comprehensive 'financial court' and suggested that the AMF should be granted the power to indemnify the victims of market abuse.63 However, this call has not led to legal reform to date.

Public enforcement

i Forms of action

The AMF has broad powers to supervise the stock markets and to investigate any related suspicious activities. Based on its findings, it may inter alia enjoin the relevant person from violating applicable laws and regulations.64 In the context of market abuse, however, the most common form of action is for the AMF to intervene after the fact by initiating a sanction procedure, as further described below.

For years, the same persons could be fined by the stock market regulator (currently the AMF) and also be convicted for the same facts by the Paris Criminal Court. However, under the influence of previous decisions of the European Court of Human Rights (ECHR) of 10 February 2009 and 4 March 2014,65 the French Constitutional Court ruled on 18 March 201566 that double public enforcement of insider-trading laws against the same person for the same facts was unconstitutional.

After several consultations on this topic, the French Parliament thus amended the law in 2016 so as to avoid double public enforcement of market abuse laws against the same person for the same facts.67 Since then, the AMF is entitled to pursue a market abuse case only if the Public Prosecutor for Financial Matters does not, and vice versa.68 In the event of disagreement between them, the Public Prosecutor of the Paris Court of Appeal has full discretion to attribute the case to either one or the other. To date, it seems that most cases are still left with the AMF,69 and that the Public Prosecutor for Financial Matters claims jurisdiction mostly when the case requires complex investigations to be conducted, notably abroad.70

Even though this is a clear improvement, the mechanism raises some questions regarding its application. The law sets no criteria as to which cases should be attributed to the AMF or the Public Prosecutor for Financial Matters. This process does not involve the defendant and does not allow for any appeal or challenge, which is a questionable oversight according to several scholars.71

The choice between administrative enforcement and criminal prosecution can have significant consequences for the defendant, who faces up to five years of imprisonment only before the Paris Criminal Court. Therefore, this mechanism has been criticised and may in the future be challenged on the basis of constitutional or international law arguments. It could be argued, for example, that it does not comply with the requirement of equal treatment or the principle of legality of criminal offences and penalties (which imposes the predictability of the law). Indeed, the ECHR states that when the criteria are not objective and defined there is an infringement of these principles.72

ii Procedure

Investigations of any matter within the AMF's jurisdiction are initiated by the AMF's secretary general. The appointed investigators have extensive powers: they can request the communication of any relevant document, including phone usage data,73 convene all relevant persons for interview, access professional premises and conduct interviews on site. If authorised by a judiciary order, they may access non-professional premises on which they can conduct interviews and they can seize relevant documents on any premises.

Recently, a number of decisions stemming from both French and European courts have called into question these investigative powers, notably as regards connection data74 and on-site searches.75 In response to these developments, the AMF announced in its 2021 priorities report that it would seek a legal reinforcement of its powers from the French Parliament. It also stated its intent to implement new artificial intelligence technologies to detect market abuses.76

At the end of its investigation, the AMF sends a draft report and a draft statement of objections, on which the investigated parties then have one month to provide comments. Based on these comments and the final investigation report, the AMF Board decides whether to initiate a sanction procedure.

If a sanction procedure is initiated, the AMF Board sends to respondents a statement of objections, on which they have two months to comment. The AMF Board also transfers the file to the AMF Enforcement Committee, which appoints one of its members as rapporteur. The rapporteur will review the case, conduct further investigation, if needed, and opine on the merits of the objections in a report, on which respondents have 15 days to comment. After a hearing during which the rapporteur, a representative of the AMF Board and the respondents will present their oral arguments, the AMF Enforcement Committee will rule on the case.

Its decision may be appealed before the Paris Court of Appeal or the French Administrative Supreme Court, depending on whether or not the respondents are professionals of the finance industry working under the AMF's supervision. The ruling of the Paris Court of Appeal may be appealed before the Supreme Court. The whole proceeding before the AMF (including the investigation phase) lasts for between two and four years. Each appeal takes 18–24 months.

The Public Prosecutor for Financial Matters has full discretion to initiate a preliminary investigation and to transmit the file to an investigating magistrate.77 Both the Prosecutor and the investigating magistrate have the same powers as in any criminal case, including access to premises, seizure of documents and conduct of interviews. If the investigating magistrate considers that there is enough evidence, he or she will refer the prosecuted parties for trial before the Paris Criminal Court. At the hearing, the Court78 will conduct a full review of the case, possibly involving experts and fact witnesses.

The three-year statute of limitations for infringements investigated by the AMF was harmonised with the six-year statute of limitations applicable in criminal matters.79

As opposed to the AMF sanction procedure, the criminal prosecution allows victims of the offence to take part in the process. They have access to the file as soon as an investigating judge is appointed with a right to require additional investigation and to challenge the investigating magistrate's decisions. In the event of trial, the victims will participate in the trial and be entitled to submit written as well as oral pleadings.

iii Settlements

Initially, only disciplinary proceedings (i.e., involving financial industry professionals) could be settled with the AMF. Law No. 2016-819 of 21 June 2016 has extended the scope of the AMF settlement procedure to all infringements falling within the AMF's jurisdiction, such as the breach by issuers or shareholders of transparency requirements and market abuse.

The first settlements in market abuses cases took place in 2017 and such procedure appears to have proven effective, with five settlements related to transparency requirements or market abuse made public during every year of the past three years.80 The settlement has a major edge over the sanctions proceedings before the AMF: it saves significant time and does not require any admission of guilt or a public hearing. According to the AMF, before the settlement was extended to market abuse, almost all defendants accepted settlement when offered.81

Nevertheless, the French Administrative Supreme Court decided that the AMF Enforcement Committee may refuse to ratify a settlement when the case raises a new and difficult question that the Committee considers that it should be ruled upon in accordance with ordinary procedure.82 The AMF Board acknowledged this decision, which, in its view, may 'jeopardize the use of the settlement procedure, either from the point of view of the AMF Board or from the point of view of the defendant'.83 Consequently, the AMF stated that it would seek a legislative change,84 as a result of which non-approval by the AMF Enforcement Committee would be limited to errors of law or fact and manifest errors of appreciation.85

Even if settlement of criminal cases is theoretically possible under French law,86 it remains exceptional in practice (as for the alternative and more favourable non-prosecution agreement mechanism,87 it is not applicable to market abuses). A settlement with the victims of the offence is always possible; however, it will only deal with civil damages and avoid any further involvement of the victims. Such a settlement will not prevent the prosecution from being continued, and the trial from being held, if the Public Prosecutor or the investigating judge deems it appropriate.

iv Sentencing and liability

The AMF is entitled to impose financial penalties of up to the higher of: (1) €100 million, (2) 10 times the profit resulting from the infringement, or (3) 15 per cent of the defendant's consolidated turnover (if applicable).88 It may also impose other types of sanctions (such as a warning or a prohibition on conducting certain businesses) on the professionals of the financial industry acting under its supervision. The amount of the fine is based on (inter alia) the seriousness of the infringement and the advantages obtained or profits gained by the infringing party. The decision is made public, unless its publication may significantly disturb the financial markets or harm the infringing parties in which case it may be anonymised.89

The Paris Criminal Court can impose fines of at least the amount of the profit resulting from the offence (if any) and up to the higher of: (1) €100 million,90 (2) 10 times the profit resulting from the infringement, or (3) 15 per cent of the defendant's consolidated turnover (if applicable), and imprisonment for up to five years.91 This applies to insider trading as well as market manipulation.92

Cross-border issues

In relation to securities admitted to trading on a French multilateral trading facility (or other securities not admitted to trading on such markets, but the value of which depends on those securities), the AMF has jurisdiction for all market abuse infringements, even if entirely committed outside France. In relation to securities admitted to trading on a regulated market in an EU/EEA Member State (other than France), the AMF has jurisdiction for all market abuse infringements committed in France.93

As for criminal proceedings, the Paris Criminal Court has jurisdiction and French criminal law applies as long as the offence was entirely or partially committed in France, even in relation to securities of a foreign issuer that is not listed in France.94 The same would be true for an offence entirely committed outside France if the victim, or the wrongdoer in some cases, was a French national at the time.95

In international civil cases, the court having jurisdiction and the applicable law will depend on the applicable international conventions. In a case involving several EU Member States, EU Regulation 1215/2012 allows plaintiffs, if they are able to demonstrate that the infringement took place in France, to file a complaint before French courts. Against a defendant outside the EU, in the absence of any convention to the contrary, plaintiffs will be entitled to seek indemnification (on a non-contractual basis) before a French court if they are French,96 or if the infringement or the resulting loss took place in France.97 In both cases, EU Regulation 864/2007 will trigger the application of French law if the loss was incurred in France.

Year in review

In 2021, both the AMF Enforcement Committee and the Parisian jurisdictions rendered significant decisions.

Two decisions of the AMF Enforcement Committee are worth mentioning considering the amounts of the fines imposed: in the first matter, where several breaches were established, including use and transmission of inside information, the total fines exceeded €18 million.98 In the other, the fines were above €37 million in total for share price manipulation and breach of various professional obligations.99

In another case, the controlling shareholder of a company, who had placed extremely aggressive buy orders that had the effect of increasing the share price, was exonerated. The AMF Enforcement Committee ruled that the buy orders reflected the existence of a genuine buying interest from the shareholder, consistent with its asset management strategy and allowing it to strengthen its stake. Consequently, these interventions were not designed to set the share price at a given level, nor did they give false or misleading information on the demand for the company's shares.100

As regards the notion of inside information and in particular its precision, the AMF Enforcement Committee confirmed its facts-oriented approach in two successive decisions.101

The AMF Enforcement Committee also recognised its jurisdiction to rule upon share price manipulation of a financial instrument traded on a market that is not regulated by the AMF, as long as a related (underlying) asset of this financial instrument is, for its part, traded on a market regulated by the AMF.102 The AMF Enforcement Committee adopted a broad vision in this respect in an international context, considering financial instruments as related, even in the absence of a legal relationship, if they are economically correlated.103

In September 2021, the Paris Court of Appeal confirmed the conviction of Bloomberg, which had disseminated false press releases. However, considering the rapid withdrawal of the documents and the publication of corrections, the Court reduced the sanction from €5 million to €3 million.104 In another matter concerning journalists, the ECJ stated that the disclosure by a journalist of inside information relating to the forthcoming publication of an article reporting rumours concerning listed companies is lawful if it is necessary for the purpose of carrying out a journalistic activity and respects the principle of proportionality.105

Concerning the AMF settlement procedure, in two separate matters one of the defendants refused to settle. In one of the two cases, the defendant was fined by the AMF Enforcement Committee, but the fine was lower than the settlement amount that the other defendant had agreed to pay.106 In the other case, the defendant was ultimately dismissed by the Enforcement Committee.107

Finally, in a matter where several investors are suing a French issuer to seek indemnification for damage allegedly caused by its financial communication in the early 2000s, the Paris Commercial Court ruled that a breach sanctioned by the AMF Enforcement Committee is not necessarily a civil fault triggering a right to indemnification.108

Outlook and conclusions

One of the subjects that should be followed this year concerns cases of obstruction to AMF investigations: the statutory provision allowing the AMF to impose sanctions in such cases has been declared unconstitutional by the French Constitutional Court109 because a criminal offence punishes the same facts with sanctions of the same nature that pursue protection of the same interests. The AMF has indicated that it will propose legislative changes to comply with the Constitutional Court's decision as soon as possible.110 A member of the AMF Enforcement Committee also stressed that the three sanctions imposed until then by the Committee for obstruction did not violate the right to silence as defined by the ECJ,111 and added that the defendant invoking this right may be considered as not fully cooperative – which is relevant to the Committee when determining the amount of the sanction.112

However, this decision of the Constitutional Court has no impact on ongoing proceedings for obstruction, provided that no prior criminal prosecution for obstruction has been brought. Consequently, the Paris Court of Appeal recently upheld a fine imposed by the AMF Enforcement Committee for obstruction.113

The decision of the Paris Court of Appeal also relates to shareholder activism, which remains a very sensitive topic. For the first time, the Court ruled on the effects of the 2012 law,114 which assimilates cash-settled derivative instruments to shares for the purposes of calculating the thresholds in a listed company's share capital, the crossing of which triggers disclosure obligations. It upheld the AMF Enforcement Committee's decision to impose a fine on the activist fund for late communication of its intention not to tender its shares in the ongoing public offer.

One other important subject that will lead to decisions at both the French and European levels in 2022 concerns retention of and access to phone data, which are key to AMF investigations. Despite recently amended statutory provisions115 and the decisions already issued on this subject,116 the state of substantive law is not yet fully established. In particular, an ECJ preliminary ruling on questions asked by the French Supreme Court117 is expected in 2022.

Finally, in the context of the war in Ukraine and the sanctions imposed on Russia, the AMF has drawn the attention of listed companies to the ESMA's points of vigilance. It invites listed companies to disclose, as soon as possible, any privileged information relating to the impacts of the crisis on their business, prospects and financial situation, unless the conditions are met to defer such information, and to publish qualitative and quantitative information on the current and foreseeable direct and indirect impacts of the crisis on the companies' business, strategy, exposures, supply chains, financial situation and performance.118


1 Bertrand Cardi and Nicolas Mennesson are partners at Darrois Villey Maillot Brochier.

2 In accordance with the EU Treaties, directives set out general rules to be transferred into national law by each EU Member State as they deem appropriate, whereas regulations are directly applicable in all EU Member States.

3 Directive 2003/6/EC of 28 January 2003, as amended.

4 Regulation 596/2014 of 16 April 2014.

5 Directive 2014/57/EU of 16 April 2014.

6 Including persons having no relation whatsoever to the issuer who, for example, became aware of the information fortuitously. Those persons, however, are subject to the various prohibitions applicable to insiders only if they know, or ought to know, that it is inside information.

7 Pursuant to the MAR, market abuse applies to financial instruments (1) admitted to trading on a regulated market or for which a request for admission to trading on a regulated market has been made; (2) traded on a multilateral trading facility (MTF), admitted to trading on a MTF or for which a request for admission to trading on a MTF has been made; or (3) traded on an organised trading facility (OTF) (MAR, Article 2).

8 In accordance with the MAR, a piece of information is precise if, first, 'it indicates a set of circumstances which exists or may reasonably be expected to come into existence or an event which has occurred or which may reasonably be expected to occur' (MAR, Article 7.2). Second, it must 'enable a conclusion to be drawn as to the possible effect of that set of circumstances or event on the prices'. The ECJ clarified this phrase by ruling that information may qualify as 'precise' under the MAD (and accordingly under the MAR) even if it does not allow someone to anticipate in what direction the share price will move upon disclosure to the market of the information (ECJ C-628/13, 11 March 2015, Jean-Bernard Lafonta v. AMF). Pursuant to the MAR, in the case of a protracted process intended to bring about a particular circumstance, not only may that future circumstance or future event be regarded as precise information, but also the intermediate steps of that process (MAR, Article 7.2).

9 The ECJ ruled that trading by an insider in the relevant securities 'implies that that person has 'used that information' within the meaning of that provision, but without prejudice to the rights of the defence and, in particular, to the right to be able to rebut that presumption' (ECJ C-45/08, 23 December 2009, Spector Photo Group v. CBFA). In accordance with this ruling, the AMF now considers that no infringement is committed by insiders who did not unduly utilise the advantage that the information conferred to them (AMF Enforcement Committee, 11 February 2015, société IC Telecom et autres).

10 Article 14 of the MAR.

11 Article 12 et seq. of the MAR.

12 Directive 2004/109/EC of 15 December 2004, as amended.

13 Directive 2004/25/EC of 21 April 2004, as amended.

14 Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014, implemented in January 2018.

15 Regulation (EU) 600/2014 of the European Parliament and of the Council of 15 May 2014, implemented in January 2018.

16 Regulation 2017/1129 of 14 June 2017 implemented in July 2019.

17 Regulation (EU) 2019/2088 of 27 November 2019, implemented in March 2021.

18 In accordance with the MAR, the same definition of 'inside information' is used for the purpose of determining if the person in possession of such information is prohibited from trading and if the issuer has a duty to disclose it to the market. Pursuant to the Transparency Directive, Member States may, however, impose more stringent obligations on their issuers.

19 Article 223-2 of the AMF General Regulation.

20 For instance, the ESMA conducted a consultation on the MAR regulation as requested by the European Commission (ESMA consults on MAR review, ESMA press release of 3 October 2019).

21 For instance, the ESMA announced and has renewed three-month-long measures prohibiting binary options' marketing, distribution or sale and restricting contracts for differences' marketing, distribution or sale to retail investors in the EU ('ESMA agrees to prohibit binary options and restrict CFDs to protect retail investors', ESMA Press Release of 27 March 2018 and 'ESMA renews binary options prohibition for a further three months from 2 April 2019', ESMA Press Release of 18 February 2019).

22 See specifically 'Questions and Answers on the Market Abuse Regulation (MAR)', ESMA.

23 'Decision of the Board of Supervisors to adopt a supervisory measure and to impose a fine', ESMA/2015/1048, 24 June 2015.

24 AMF General Regulation, Article 223-6. In two instances, the AMF imposed fines based on this provision, even though the transaction had remained confidential (AMF Enforcement Committee, 13 December 2010 and 25 June 2013).

25 Article 231-4 et seq. of the AMF General Regulation.

26 Article L233-11 of the Commercial Code.

27 The infringer will be automatically sanctioned by the loss of the voting rights attached to the non-disclosed publicly traded securities for two years; this sanction may be increased to five years by court order upon request of the company, any shareholder or the AMF. Additionally, non-disclosure constitutes both a criminal offence punished by a fine and an infringement of the AMF General Regulation.

28 Article 17 of the MAR; AMF, Guidelines on the permanent disclosure requirement and the management of inside information, October 2016.

29 Articles L465-1 and L465-2 of the Financial and Monetary Code.

30 Article 705-1 of the Criminal Procedure Code.

31 In particular ECHR, 4 March 2014, Grande Stevens and Others v. Italy, 18640/10, 18647/10, 18663/10, 18668/10 and 18698/10, confirmed by ECHR, 6 June 2019, C. c/ France, 47342/14.

32 French Constitutional Court, 18 March 2015, 2014-453/454 QPC and 2015-462 QPC.

33 Colmar Court of Appeal, 14 October 2003, 01/03432.

34 Article 1240 of the Civil Code.

35 However, as of 2016, the financial penalties imposed by the AMF can be increased by up to 10 per cent to fund the indemnification of victims (Article L621-15 of the Financial and Monetary Code).

36 For a recent example, see Paris Civil Court, 2 March 2020, 16/15250.

37 Article L623-1 et seq. of the Consumer Code.

38 For a recent example, see Paris Commercial Court, 7 July 2021, 2011027112, 2012033467, 2012029636, 2012056220 and 2012028100. The decisions have been challenged before the Paris Court of Appeal.

39 Criminal Chamber of the Supreme Court, 11 December 2002, 01-85176 and 18 April 2018, 18-80857.

40 Article L621-12-1 of the Financial and Monetary Code. So far, two document requests submitted pursuant to this provision have been rejected by the Paris Civil Court (Paris Civil Court, 29 August 2017, 16/03173; Paris Civil Court, 22 January 2018, 16/07107).

41 Paris Court of Appeal, 26 September 2003, 2001/21885.

42 Commercial Chamber of the Supreme Court, 9 March 2010, 08-21547. In that case, however, the issuer had been declared bankrupt after an audit had revealed that its accounts were grossly inaccurate.

43 Actions brought against the issuer's officers, either by the issuer or its shareholders, are subject to a specific statute of limitation of three years (indemnification claims are otherwise subject to a five-year statute of limitation). However, it has been ruled that in the event that the issuer exercises a recourse action against its officers or directors, the three-year period starts when the main indemnification claim is filed against the issuer (Commercial Chamber of the Supreme Court, 6 May 2014, 13-17632).

44 French Supreme Court, 16 May 2018, 16-20.684.

45 Class actions were only admitted under French law in 2014 and are available mostly to consumers against a professional having sold goods or provided services in breach of their legal duties, or violated antitrust laws.

46 AMF, Report on the indemnification of losses incurred by investors, 25 January 2011.

47 Directive (EU) 2020/1828 of the European Parliament and of the Council of 25 November 2020 on representative actions for the protection of the collective interests of consumers, and repealing Directive 2009/22/EC.

48 Pierre-Henri Conac, 'Vers des class actions en matière boursière en Europe et en France?', Revue des sociétés (2018 ), p. 472 et seq.

49 Article L452-2 et seq. of the Financial and Monetary Code.

50 Outside this legal framework, the solicitation of mandates by investors to initiate action on their behalf allows the court to consider the writ of summons null and void and therefore dismiss the claim, as it did in the proceeding initiated against Natixis by approximately 1,000 investors (Bobigny Commercial Court, 22 November 2011, RG 2010F01401).

51 Article R225-167 of the Commercial Code.

52 Article 138 et seq. of the Civil Procedure Code.

53 Article 145 of the Civil Procedure Code.

54 Commercial Chamber of the Supreme Court, 9 March 2010, 08-21547 and 6 May 2014, 13-17632.

55 Paris Court of Appeal, 17 October 2008, 06/09036.

56 Paris Court of Appeal, 17 February 2015, 10/04697.

57 See, inter alia, 'Assessment of the financial loss of investors in listed corporations', Report of the Club des juristes, November 2014.

58 Paris Civil Court, 2 March 2020, 16/15250.

59 A.-V. Le Fur and D. Schmidt, 'Il faut un tribunal des marchés financiers', Recueil Dalloz (2014), p. 551 et seq.

60 French Supreme Court, 6 May 2014, 13-17.632 and 13-18.473. See also, A. Gaudemet, 'Réparation du préjudice boursier: l'hypothèse d'une politique jurisprudentielle', Bulletin Joly Bourse (July 2014), p. 340 et seq.

61 Paris Civil Court, 2 March 2020, 16/15250.

62 D. Kling, 'La CCI Paris Île-de-France et la doctrine en droit bancaire et financier', Revue de droit bancaire et financier (January 2020).

63 See footnote 59.

64 Article L621-14 of the Financial and Monetary Code.

65 ECHR, 10 February 2009, Zolotoukhine v. Russia, 14939/03, and ECHR, 4 March 2014, Grande Stevens and Others v. Italy, 18640/10, 18647/10, 18663/10, 18668/10 and 18698/10.

66 French Constitutional Court, 18 March 2015, 2014-453/454 QPC and 2015-462 QPC.

67 Law No. 2016-819 reforming the market abuse enforcement system, 21 June 2016.

68 Article L465-3-6 of the Financial and Monetary Code.

69 Frédérique Perrotin, 'Zoom sur les résultats du parquet financier', Les Petites Affiches (11 juin 2019), p. 6 et seq.

70 Olivia Dufour, 'Covid-19: l'AMF sur le pied de guerre', Les Petites Affiches (19 mai 2020), p. 3 et seq.

71 Sophie Schiller, 'L'action de l'Autorité des Marchés Financiers : la composition administrative', Bulletin Joly Bourse (March 2017), p. 147 et seq.

72 ECHR, 22 November 1995, S.W. v. the United Kingdom, 20166/92.

73 The legal framework for the AMF's collection and use of phone usage data was amended in 2018, at the request of the French Constitutional Court, so that an independent supervisor ensures that the defendants' rights are safeguarded.

74 ECJ, 6 October 2020, C-511/18, C-512/18 and C-520/18 (see Maxime Galland, 'AMF: enquêtes, contrôles et sanctions', Etudes Joly Bourse, 7 January 2021); French Supreme Court, 1 April 2020, 19-80.900.

75 French Supreme Court, 14 October 2020, 18-17.174 and 18-15.840; 4 November 2020, 19-17.911.

76 AMF, 'Priorités 2021 de l'Autorité des marchés financiers', p. 3 and p. 11.

77 The investigating magistrate is a judge in charge of reviewing all aspects of the case, theoretically both in favour of and against the prosecuted persons. The Prosecutor may also refer the matter directly to the Paris Criminal Court for trial. This is rarely the case in complex matters, but there are precedents of direct referrals in market abuse cases, which allowed the Paris Criminal Court to rule before the AMF (Salomon, 'Le principe ne bis in idem et les infractions boursières', JCPE No. 15, 9 April 2015, 1182).

78 Composed of three judges but no jury.

79 'Loi relative à la croissance et la transformation des entreprises' of 23 May 2019.

80 2019, 2020 and 2021 (AMF website, 'Sanctions et transactions',

81 Anne Maréchal and Bertrand Legris, 'La composition administrative de l'AMF: un premier bilan très positif', Bulletin Joly Bourse (December 2016), p. 539 et seq.

82 French Administrative Supreme Court, 20 March 2020, 422274.

83 See 'The AMF acknowledges the decision of the Administrative Supreme Court regarding settlement procedure', AMF press release, 20 March 2020.

84 AMF, 'Priorités 2021 de l'Autorité des marchés financiers', p. 11.

85 Statement of Robert Ophèle, the AMF Chairman – Law Commission of the National Assembly – Mission of information on the evaluation of the Sapin 2 law – 24 March 2021.

86 Articles 41-2 and 495-7 of the Criminal Procedure Code; article L465-3-6, X, of the Financial and Monetary Code.

87 Article 41-1-2 of the Criminal Procedure Code.

88 Article L621-15 of the Financial and Monetary Code.

89 As a result, it remains intricate to prevent the decision of the AMF Enforcement Committee to be published; however, parties may request that it be anonymised.

90 The fine amounts mentioned in this paragraph are the maximum fines that may be imposed on natural persons. For legal entities, the maximum fine referred to under (1) is €500 million.

91 Unconditional imprisonment of persons convicted for market abuse is rare in France. Indeed, to our knowledge, it has happened in only two cases.

92 Article L465-1 et seq. of the Financial and Monetary Code.

93 Article L621-15 of the Financial and Monetary Code and Article 611-1 of the AMF General Regulation.

94 Article 113-2 of the Criminal Code. This was confirmed in an insider-trading case relating to a US corporation (the shares of which were only listed in the United States) where the order to purchase shares had been made in France (Criminal Chamber of the Supreme Court, 3 November 1992, 92-84745).

95 Articles 113-6 and 113-7 of the Criminal Code.

96 Article 14 of the Civil Code.

97 Article 46 of the Civil Procedure Code.

98 AMF Enforcement Committee, 28 April 2021, SAN-2021-06, this decision has been challenged before the Paris Court of Appeal.

99 AMF Enforcement Committee, 4 August 2021, SAN-2021-14, this decision has been challenged before the Paris Court of Appeal and before the French Administrative Supreme Court.

100 AMF Enforcement Committee, 26 February 2021, SAN-2021-01.

101 AMF Enforcement Committee, 9 July 2021, SAN-2021-13 and AMF Enforcement Committee, 3 August 2021, SAN-2021-15.

102 AMF Enforcement Committee, 28 May 2021, SAN-2021-09, this decision has been challenged before the Paris Court of Appeal.

103 For an example of this position in a previous case, see Paris Court of Appeal, 25 March 2021, 20/024047.

104 Paris Court of Appeal, 16 September 2021, 20/03031.

105 ECJ, 15 March 2022, C 302/20.

106 AMF Enforcement Committee, 29 December 2021, SAN-2022-01.

107 AMF Enforcement Committee, 26 February 2021, SAN-2021-01.

108 Paris Commercial Court, 7 July 2021, 2011027112, 2012033467, 2012029636, 2012056220 and 2012028100. The decisions have been challenged before the Paris Court of Appeal.

109 French Constitutional Court, 28 January 2022, 2021-965 QPC.

110 AMF press release, 18 February 2022.

111 ECJ, 2 February 2021, C 481/19.

112 AMF Enforcement Committee symposium, 6 October 2021.

113 Paris Court of Appeal, 24 March 2022, 20/08390.

114 Law No. 2012-387, 22 March 2012.

115 Law No. 2021-998, 30 July 2021; Decree No. 2021-1361, 20 October 2021.

116 ECJ, 6 October 2020, C 511/18, C 512/18 and C 520/18; French Administrative Supreme Court, 21 April 2021, 393099.

117 French Supreme Court, 1 April 2020, 19-82.223.

118 AMF press release, 15 March 2022. See also the publication of the ESMA dated 14 March 2022 – ESMA coordinates regulatory response to the war in Ukraine and its impact on EU financial markets.

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