Adjudication without Frontiers
Edited by Horatia Muir Watt, Lucia Bíziková, Agatha Brandão de Oliveira and Diego P. Fernandez Arroyo
Chapter 17: Economic transplants: Lafonta v. Autorité des marchés financiers
European financial markets operate as a highly integrated regime that promotes transparency and tackles systemic financial risk. It is no surprise that insider trading and market manipulation are heavily regulated. And one of the key instruments that have been used to combat market abuse – the Market Abuse Directive 2003/124 – was the focus of this 2015 Court of Justice of the European Union (CJEU) case. In Lafonta v. Autorité des marchés financiers, the CJEU interpreted the meaning of ‘precise information’ in the context of inside information under the 2003 Directive, which was applicable at that time. Inside information referred to any undisclosed information relating to financial instruments, which could have a significant effect on the prices of those instruments if it were made public. The Implementing Directive further specified that information was to be considered precise if it allowed an investor to draw conclusions on the price movement of an investment. It was, however, unclear whether one was also required to predict a particular direction of the price movement – up or down – to meet this part of the test. Mr. Lafonta was a chairman in a company called Wendel that concluded a swap agreement with a number of credit institutions in September 2007. The underlying assets of the swaps were shares in Saint-Gobain. Wendel acquired more than 66 million shares in Saint-Gobain, which represented 17.6% of its share capital. Wendel informed the AMF, the French market regulator, that it exceeded the thresholds of 5%, 10%, 15% and 20% of the company’s share capital.
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