Statutory Regulation of Inside Information Use.


Legal Update No. 167.

Goltsblat BLP advises that Federal Law No. 224-FZ of 27 July 2010 “On Combating Illegal Use of Inside Information and Market Manipulations and Amending Certain Legislative Acts of the Russian Federation” (the “Law”) has been adopted to come into effect substantially on 27 January 2011.

The Law provides a regulatory framework for handling information about financial instruments, foreign currency and goods that are traded on an organised market in Russia or for which an application has been filed for trading in Russia.

The Law defines inside information as accurate and specific information that has not been disseminated or communicated but that may materially affect the prices for financial instruments, foreign currency or goods if disseminated or communicated. The Law contains an extensive list of persons qualifying as insiders, defines data that constitute inside information for certain categories of insiders, determines the authorities of the federal financial markets regulator (the Federal Service for Financial Markets, FSFM), other government and municipal bodies and the Bank of Russia for approving exhaustive lists of inside information.

The Law also discusses actions qualifying as market manipulation and sets forth additional requirements on inside information disclosures and legal means of control over illegal use of the information. 

The Law provides for certain means of preventing, identifying and restraining illegal use of inside information and market manipulations, in particular:

  • defining the procedure and timelines for disclosure or communication of inside information, including on the Internet;
  • requiring legal entities classed under relevant insider category to maintain a list of their insiders and notify their officers of inclusion on (exclusion from) the list, communicate the insider list to the FSFM and adopt an inside information access procedure, rules for securing confidentiality of inside information and regulations on monitoring compliance with the requirements of the Law;
  • requiring the insiders to notify the FSFM of any transactions they make.

Failure to meet the statutory requirements may, in certain instances, trigger suspension or cancellation of the license for professional activities on the securities market or other activities licensed by the FSFM or the banking licence, whichever applies.

The Law also stipulates that editorial office and staff of a publication cannot be held liable for dissemination of knowingly false data if the information contained in the relevant publication reiterates statements of specific persons or reproduces data previously published by other media word for word.
The Law emphasises that conclusion of transactions accompanied by use of inside information or classified as market manipulations does not constitute grounds for invalidating the transactions.

Please note as well that the Law introduces new offences in the sphere of insider information use and market manipulations.

The Russian Code of Administrative Offences has been amended to cover the following administrative offences:

  • art. 15.21 “Illegal Use of Inside Information”;
  • art. 15.30 “Market Manipulations”;
  • art. 15.35 “Failure to Meet Statutory Requirements on Combating Illegal Use of Inside Information and Market Manipulations” (the article comes into force on 31 July 2011).

The Russian Criminal Code has been amended to cover the following crimes:

  • art. 185 “Market Manipulations”;
  • art. 185 “Illegal Use of Inside Information” (the article comes into force on 31 July 2013).

For additional information, please contact:

Anton Sitnikov, Partner,
Head of Corporate/ M&A
Goltsblat BLP;
T: +7 (495) 287 44 44,

Anton Rogoza, Partner,
Goltsblat BLP;
T: +7 (495) 287 44 44,

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