Complinet Poll page
Compliance Complete
Home
Calendar
News & Analysis filter
Global Screening
News
Rulebooks
Weekly content
Policy Manager
Tracker
Training
Message boards
Country guides
Directory
Practice notes
Double jeopardy: ECHR findings in market
manipulation case Grande Stevens and
Others v Italy
Aug 15 2014 Laura Atherton and Gabriela da Costa
RecordKeeper
Search
Hello Jean | Log out
CCO
My Profile
Search news
Related content
August 15, 2014
Search
News by subject
Financial crime and anti-money
laundering
Go
Subject browser
Advanced
Enforcements
Market abuse and insider trading
A recent judgment emanating from the
European Court of Human Rights
(ECHR) focused on the European
interpretations of the concepts of a right
to a fair trial and the "ne bis in idem"
principle, also known as the "double
jeopardy" rule. The judgment contains
some potentially far reaching implications
for member states' prosecuting and
administrative authorities.
Sanctions, regulatory enforcements and
criminal proceedings
Browse all subjects
News by country
France
Italy
View country guides
The facts
The Case of Grande Stevens and Others v Italy (application nos 18640/10, 18647/10, 18663/10 and 18698/10) concerned
administrative and criminal proceedings brought against two companies, Exor s.p.a (a majority shareholder in the Italian car
manufacturer FIAT) and its majority shareholder Giovanni Agnelli & C. s.a.s., together with their chairman Mr Gabetti, an
authorised representative, and the Agnelli group's lawyer Mr Grande Stevens (the applicants) in respect of allegations of
market manipulation in Italy.
The proceedings centred on a press release issued on August 24, 2005 by Exor and Agnelli, in response to a request from
CONSOB, the Italian Commission charged with protecting investors and ensuring transparency and development of the stock
markets. CONSOB had asked the applicants to provide information to the market about any initiatives they were taking at the
time with respect to the upcoming expiry of a 2002 loan agreement between FIAT and several banks. Under that agreement, if
FIAT failed to repay the loan, the banks could set off their claim by subscribing to an increase in FIAT's share capital. Such set
off would have resulted in Exor losing its majority shareholding and the banks becoming the majority shareholder in FIAT.
The applicants' press release indicated that Exor had neither instituted nor examined any initiatives concerning the expiry of the
loan agreement and that Exor wished to remain FIAT's "reference shareholder". No mention was made of the fact that, in
reality, Exor (and representatives of Agnelli) had already entered into negotiations with Merrill Lynch International Limited to
renegotiate a separate agreement Exor had with Merrill Lynch, which would allow Exor to maintain control of FIAT after the
expiry of FIAT's loan agreement.
Most read articles
Compliance Insight: New
regime for bank staff – Part 4 –
New Conduct Rules
EXCLUSIVE: Standard Chartered
to scour past transactions for
money laundering as New York
regulator looks on
Regulatory Insight: Reforming a
holy bank — Pope deals with
money lenders in the temple
U.S. anti-money laundering unit
FinCEN defines 'culture of
compliance' for senior
executives
As U.S. "non-cooperative" AML
jurisdiction list narrows, it's
important to stay alert
Message boards
Showallall
messages
Show
messages
Issuers
CONSOB was not informed of these negotiations until September 14, 2005, the day before Exor entered into the renegotiated
agreement with Merrill Lynch.
In February 2006, CONSOB's insider trading office accused the applicants of market manipulation in breach of Italian Law for
their failure to mention the negotiations with Merrill Lynch in the press release, and in particular for "disseminating information
... capable of providing false or misleading information concerning financial instruments". CONSOB subsequently imposed
administrative sanctions on the applicants and banned the individuals from administering, managing and controlling companies
listed on the stock exchange for varying periods.
Separately, the applicants were criminally prosecuted for the same conduct and Gabetti and Grande Stevens were convicted of
a criminal offence. The applicants lodged their case with the ECHR on the basis that the conduct of the various proceedings
against them was in breach of several rights enshrined in the European Convention on Human Rights. Gabetti and Grande
Stevens also appealed their conviction in the Italian criminal court, which was still pending at the time of the ECHR's judgment.
The ECHR considered a number of potential violations of the Convention and found that there had been a breach of Article
6(1), the right to a fair trial, on several grounds. However, the aspect of the case with potentially the most far reaching
implications is the court's decision that the criminal prosecution of the applicants, in addition to administrative enforcement
action for the same conduct, was a breach of the ne bis in idem principle as articulated in Article 4 of Protocol No 7 (Article 4).
Article 4 states that no one shall be liable to be tried or punished again in criminal proceedings under the jurisdiction of the
same member state for an offence for which he has already been finally acquitted or convicted in accordance with the law and
penal procedure of that state. The court found a violation of Article 4 notwithstanding that only one of the proceedings in the
case before them was recognised in Italy as "criminal" in nature.
Global Money Laundering
5 posts (last post Aug 14, 2014)
Please can you confirm what extent of
CDD should b...
Stonebridge Final Notice
UK and Europe Insurance
1 post (last post Aug 13, 2014)
Stonebridge was fined last week
regarding mis-sell...
Stop whining
General Discussion
5 posts (last post Aug 11, 2014)
Banks are treated like criminals because
they are...
Add a post
More messages
Reference Library
A new European standard for double jeopardy
Practitioner's Guide for BrokerDealers
Following the rejection by the Grand Chamber of the attempt to refer this case, the position under Grande Stevens now
The MLRO Handbook
http://www.complinet.com/global/news/news/article.html?ref=173752[15/08/2014 08:46:21]
Complinet Poll page
represents the ECHR's interpretation of ne bis in idem, for the time being. So what then does this mean for enforcement
authorities and defendants in the member states?
Historically, it had generally been accepted that where both administrative and criminal enforcement proceedings were
available for the same conduct, both could be pursued. Whether proceedings were "administrative" or "criminal" had also
largely been left to the national legislatures or courts to decide.
Indeed, just prior to the ECHR's judgment, the French Supreme Court had ruled that the imposition of both an administrative
sanction by the French financial markets authority (the AMF) and a successive criminal sanction for the same market
manipulation event, was not contrary to ne bis in idem (Case No 12-83579, 22 January 2014). Even the Court of Justice of the
European Union had previously held that ne bis in idem did not preclude a Member State from imposing a tax penalty and a
criminal penalty successively for the same conduct "in so far as the first penalty is not criminal in nature, a matter which is for
the national court to determine" (Case C-617/10, Aklagaren v Hans Akerberg Fransson).
Post Grande Stevens, member states are on notice that where both criminal sanctions and sanctions formally classified as
"administrative" are applied, the latter will not necessarily be immune from challenge under Article 4. The ratio of this judgment
could potentially have some unintended consequences.
Authorities in areas where concurrent administrative and criminal enforcement powers exist (including, among others, financial
regulation, tax and competition law) may, in future, see offenders appealing the validity of multiple sanctions for the same
conduct on the basis that their imposition violates Article 4, even where such sanctions are imposed by different authorities with
different policy goals in mind.
It is also possible that Grande Stevens could undermine the effectiveness of separate enforcement regimes. Offenders may be
incentivised to "forum shop" i.e. to voluntarily approach first and/or cooperate with the authority threatening the least severe
sanctions in order to evade sanction from another authority.
In future, enforcement authorities will need to carefully assess whether, taking into account the following factors, a charge might
be considered "criminal" for the purposes of Article 4: (i) the legal qualification of the disputed measure under national law; (ii)
the nature of the measure; and (iii) the nature and the severity of the sanctions. These criteria are alternative, not cumulative;
though a cumulative approach may be possible where the separate analysis of each criterion does not lead to a clear
conclusion as to the existence of a "criminal" charge.
As a final thought, it is notable that although, on its face, Article 4 concerns criminal proceedings within the same member state,
Article 50 of the Charter of Fundamental Rights of the European Union expands the scope of application of ne bis in idem to
the entire European Union. This means that dual trial or punishment for the same conduct in different member states is
prohibited. Under the Treaty of Lisbon, the charter is automatically applicable in member states, thus, exceptions aside, this
external application of ne bis in idem is generally mandatory.
Following the principle articulated in Grande Stevens through to one possible conclusion, the ECHR has potentially opened up
avenues for individuals facing administrative sanctions in one member state to challenge the validity of criminal sanctions in
another member state, and vice versa, where both proceedings are based on the same conduct. Whether this becomes a
reality is too uncertain to predict.
Lauran Atherton is a senior associate in the K&L Gate’s London office. She is primarily concerned with the firm's
regulatory and corporate crime practices. Gabriela da Costa is an associate in the same office. She concentrates her
practice on antitrust, competition and trade regulation matters. The views expressed are their own.
Comment on this article
Subject*
Name or pseudonym*
Message*
Submit Message
THOMSON REUTERS GRC | © 2011 THOMSON REUTERS. ALL RIGHTS RESERVED
http://www.complinet.com/global/news/news/article.html?ref=173752[15/08/2014 08:46:21]
The Compliance Handbook
MiFID Survival Guide
The Insurance Practitioner's
Guide