1 Part 2. How to combat fraud and insider trading

2 What MAD ensures in the context of inside information access to inside information For your consideration:  is the access equal or not?  should there be exception for the State’s top secret information?

3 What MAD ensures in the context of inside information Prompt and fair disclosure For your consideration:  should the disclosure be made at the preliminary stage of decision making process?  how should the transaction of primary insiders made at the preliminary stage be treated?  could too early disclosure mislead the public?  do investors react twice on the “same” information?

4 What MAD ensures in the context of inside information Delaying public disclosure of inside information For your consideration: Should regulators be informed about the delay when the delay would not mislead the public?

5 What MAD ensures in the context of inside information Transparency of primary insider transactions For your consideration:  Is such information relevant for investors?  Is such information relevant for competent authority?

6 What MAD ensures in the context of inside information List of insiders For your consideration:  Short list  Long list

7 What is the relevance of MAD to combating market abuse? Expanding the scope of prohibition of insider dealing sanctioning of unlegitimate disclosing sanctioning of using inside information sanctioning of recommending, inducing to use inside information

8 How does it operate in Poland? Primary insiders are under two regimes Criminal regime – for transactions based on inside information Administrative regime – for transactions concluded in closed periods

9 How does it operate in Poland? What did closed periods change? Minimalize the likelihood of being prosecuted for insider trading Changed the behaviour of primary insiders

10 How did it operate in Poland? Primary insiders are under the administrative regime Other insiders under criminal regime Why we changed it? Administrative sanctions not deterrent enough It was neccesary to prove that wrongdoing was based on information

11 Insider dealing mitigants – public companies’ initiatives Protection of inside information Awareness of employees Dealing culture Internal regulations

12 Insider dealing mitigants –protection of inside information Protect from unauthoriesd access to inside information Reducing the extent to which authorised access to inside information is possible Prompt disclosure of inside information to the market

13 Insider dealing mitigants - awareness Assess the knowledge of employees Identify the potential scale of employees’ trade activity Educate employees about the trade during prohibited periods Monitor their knowledge Highlight the risk factors to them

14 Insider dealing mitigants – dealing culture Educate employees about market principles and reputational risk for the company and for themselves Illustrate the policy of the company in case of trading during probibited periods Explain to them the importance of confidence for the growth of the company Description of action taken by the supervisor

15 Insider dealing mitigants – internal regulations or principles Adopt binding procedure or code of good practices Prepare guidance

– market manipulation and other misconducts 40 – notifications annually 15 – administrative proceedings 15 – pending cases in the court annually Insider Trading