Increased criminal liability for violations on the securities market

18.11.2009

Legal Update No.  87.

Goltsblat BLP advises that Federal Law of 30 October 2009 No. 241-FZ “On Amendments to the Criminal Code of the Russian Federation and Article 151 of the Criminal Procedure Code of the Russian Federation” (the Federal Law) came into effect on 13 November 2009.

The Federal law amends the Criminal Code of the Russian Federation (the Criminal Code) with respect to crimes committed on the securities market.

The descriptions given in part one, article 185 “Abuses during security issues” and article 185.1 “Malicious avoidance of providing an investor or controlling authority with information stipulated in the legislation of the Russian Federation on securities” are specified and somewhat expanded.

Three new articles have been added to the Criminal Code:

185.2 “Violation of the procedure for recording rights to securities”. This applies to people whose duties include recording such rights. The qualifying elements consist of large-scale damage, performance by collusion by a group of persons or an organised group or especially large-scale damage. Sanction - from a fine to 6 years’ deprivation of freedom;

185.3 “Price manipulation on the securities market”. Manipulation is understood as the actions indicated in the legislation on the securities market. The qualifying elements consist of large-scale damage, derivation of large-scale income, use of the mass media or information technology networks (Internet, etc.). Sanction - from a fine to 7 years’ deprivation of freedom;

185.4 “Impeding exercise of or unlawfully restricting the rights of holders of securities”. The description envisages unlawful refusal to convene a general meeting, to register at such as meeting, holding a meeting in the absence of a quorum, and any other impediment to exercise of or unlawful restriction on the rights of holders of equity securities or investment units in unit investment trusts. The qualifying elements consist of large-scale damage, derivation of large-scale income, performance by collusion by a group of persons or an organised group. Sanction - from a fine to 5 years’ deprivation of freedom.

According to the amended note to article 185 of the Criminal Code, for the purposes of application of articles 185 - 185.4 of the Criminal Code, large-scale damage and large-scale income are recognised as damage and income to a sum of over 1 million roubles and especially large-scale damage - 2.5 million roubles.

 
For additional information, please contact:

Anton Sitnikov, Partner,
Corporate / Mergers & Acquisitions
Goltsblat BLP,
by e-mail: info@gblplaw.com


Anton Rogoza,
Partner,
Corporate / Mergers & Acquisitions
Goltsblat BLP,
by e-mail: info@gblplaw.com

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