Insider abuse

Definition of Insider abuse

Insider trading occurs when an individual, in possession of confidential information, engages in buying or selling financial instruments, either for his or her own account or for the account of a third party. This behavior also includes communicating such information to third parties or giving advice based on it.

Insider Insights

A person, commonly referred to as an insider (see insider trading), can obtain inside information in a variety of ways, such as by participating in the capital of a company, holding positions on administrative, management or supervisory bodies, or by holding a public office, a specific profession or a particular position.

Inside information, also known as price sensitive, refers to specific, non-public data concerning financial instruments or issuers of financial instruments. If made public, such information would have the potential to significantly influence the market price of such instruments.

Regulations and penalties

In Italy and Europe, insider trading is considered a serious crime. The main regulatory references include Legislative Decree No. 58 of February 24, 1998, known as the Consolidated Law on Financial Intermediation (TUF), and European Regulation No. 596/2014 on Market Abuse Regulation (MAR), with any updates. Article 184 of the TUF establishes penalties of 2 to 12 years’ imprisonment, accompanied by fines ranging from €20,000 to €3,000,000.

In Italy, CONSOB is the authority responsible for monitoring and controlling market abuse, including insider trading.

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