The prohibition of unlawful disclosure under point (c) of Article 14 of the MAR is designed to limit the number of persons who are in possession of inside information, in order to thereby reduce the risk of prohibited insider dealing. This is therefore a Vorfeldtatbestand that supports the prohibition of insider dealing.

Disclosure

The offence can be committed both by direct onward disclosure and by enabling another person to come into possession of inside information, and hence both by active behaviour and by refraining from acting. There is no requirement for a guarantor status for this, as it involves a genuine omission offence. This means that there has been no fundamental change in substance compared with the previous legal position.

The inside information is disclosed when the recipient is put into a position where he or she comes into possession of the inside information without any major difficulties. It is not necessary in such cases for the recipient to actually perceive the information to be inside information or to recognise that it is inside information.

The public disclosure of inside information is not the same as the offence of “disclosure” referred to here (see recital (49) of the MAR), because the information loses its characteristic as inside information. Public disclosure does not expand the number of insiders, but rather reduces it to zero, with the result that the principle of a level playing field where information is concerned, on which the prohibition of disclosure is also based, is not infringed. Additionally, the criteria are not met in full if the inside information was already known to the recipient, because in this case, too, the number of insiders is not expanded and the risk of prohibited insider dealing is therefore not increased. In such cases, however, a punishable attempt may come into question.

The prohibition of disclosure is addressed to the same group of persons as the prohibition of insider dealing (see the second subparagraph of Article 10(1) of the MAR, which refers to Article 8(4) of the MAR). This means that primary and secondary insiders are captured in equal measure, where the latter only fall under the prohibition if they knew or ought to have known that the information constitutes inside information.

Unlawful

Only unlawful disclosure, which is negatively defined in the first subparagraph of Article 10(1) of the MAR, is covered by the prohibition. This states that disclosure is generally unlawful except where the disclosure is made in the normal exercise of an employment, a profession or duties. The European legislator took into account the fact that, in certain cases, there may be a legitimate interest in disclosing inside information. Because the MAR only addresses the lawfulness of disclosure by means of a general clause, it can only be interpreted through recourse to national law.

Where an issuer or an emission allowance market participant, or a person acting on their behalf or for their account, discloses any inside information to any third party in the normal course of the exercise of an employment, profession or duties as referred to in Article 10(1) of the MAR, compliance with Article 17(8) of the MAR must be ensured (see section I.3.3.1.4).

Lawful disclosure in the normal exercise of an employment, a profession or duties

Disclosure is lawful if it is made in the normal exercise of an employment, a profession or duties.

In principle, the lawfulness of the disclosure must be determined by weighing the insider’s interest in public disclosure with the market’s interest in curbing inside information, and this must be done by means of a proportionality assessment. Considering the fact that any disclosure of inside information can increase the risk of insider dealing, the exemptions from the prohibition of disclosure must generally be interpreted very narrowly.

Public disclosure of inside information is therefore only lawful for pursing a legitimate purpose, i.e. the public disclosure must pursue a legally allowable purpose. In addition, the disclosure must be closely linked to and necessary for the exercise of an employment, a profession or duties. What this means is that disclosure is only lawful if possession of the inside information by other persons is necessary to achieve the purpose, i.e. that purpose cannot be achieved by moderate measures that do not increase the risk of insider dealing. In particular, disclosure must be limited to the number of persons who must be in possession of the inside information in order to achieve the purpose pursued by the disclosure (need-to-know principle).

In the context of appropriateness, the interest in public disclosure must ultimately outweigh the interest of the markets in curbing the disclosure of inside information. The criterion for assessing this is in particular the specific risk of prohibited insider dealing or the prohibited recommendation or inducement due to the public disclosure of inside information. Price-sensitivity and the reliability of the recipient must also be considered. The lawfulness of a disclosure can be supported, for example, if measures are taken to restrict the flow of information, for example using non-disclosure agreements. Equally, it may make sense to consider whether the onward disclosure of the information was accompanied by an express indication that the information was inside information, with resulting associated legal consequences.

Lawful disclosure to comply with statutory requirements

Public disclosure is also lawful if it is made to comply with a statutory requirement. These include in particular statutory disclosure obligations, such as the requirement to make public ad hoc disclosures (Article 17 of the MAR) or voting rights in a listed company (section 33 of the WpHG).

The legal norm must take precedence over the prohibition of the disclosure of inside information, i.e. its content must require the public disclosure of inside information. If this is not expressly regulated, it must be assessed through interpretation. The prohibition of disclosure may take priority in particular if the disclosure obligation is subject to particular interests of the person making the disclosure in maintaining confidentiality (e.g. section 106 (2) sentence 1 of the Works Constitution Act (Betriebsverfassungsgesetz – BetrVG)).

The disclosure obligation must be stipulated by law and not agreed privately through freedom of contract, otherwise the prohibition would be at the discretion of the contracting parties. Furthermore, such obligations are not in themselves sufficient to legitimise the onward disclosure of inside information because they do not constitute any duty of onward disclose of the information. However, disclosure may still be lawful on the basis of an assessment of the criteria described above.

Special case: Disclosure to authorities

The disclosure of inside information to authorities by the market participant concerned will normally be lawful under the second half of Article 10(1) of the MAR if disclosure is an obligation as part of an approval or other official decision-making procedure in which the disclosing market participant is an involved party.

Outside any approval or other official decision-making procedure, disclosure by the market participant concerned to authorities will normally comply with the second half of Article 10(1) of the MAR if there is a prudential relationship and disclosure to the authority appears necessary to ensure proper supervision of the company to which the inside information relates.

Under the second half of Article 10(1) of the MAR, disclosure within the administrative supervisory structures to higher-level administrative bodies will also normally be lawful in both of these scenarios. This applies both to disclosure by the supervised authority and to disclosure by the market participant itself.

Disclosure of a recommendation or inducement

Under Article 10(2) of the MAR, the onward disclosure of a recommendation or inducement is also deemed to be unlawful disclosure of inside information within the meaning of Article 8(2) of the MAR if the person making the disclosure knows or ought to know that the recommendation or inducement is based on inside information. In contrast to Article 8(2) of the MAR, Article 10(2) of the MAR concerns the onward disclosure of a third-party recommendation or inducement. The person committing the offence does not necessarily have to possess inside information him- or herself.

In this context, the term “onward disclosure” is understood to be synonymous with the term “disclosure” in accordance with Article 10(1) of the MAR. Onward disclosure of the recommendation or inducement is deemed to have happened if the recipient is put into a position where he or she comes into possession of the recommendation or inducement without any major difficulties.