The disseminated information must give false or misleading signals about the price of a financial instrument. In the case of omission, withholding the information must send false or misleading signals. It is sufficient if such false or misleading signals are likely.

In practice, BaFin applies an objective, ex post assessment to identify false or misleading signals. The issuer has sent a signal if a reasonable market participant would (probably) consider the information in his or her investment decision because the information will (probably) influence supply and demand forces. The direction in which supply and demand forces could be influenced is not relevant in this context, in other words whether the information or withholding information would be likely to move the price up or down or keep it steady. A typical example of such information that sends a signal is inside information as defined in Article 7(1) of the MAR.

A signal is false if it does not correspond to the facts. A signal is misleading if it is objectively likely to give a false impression to a reasonable investor (objective analysis). It is sufficient that there is a specific risk that a reasonable investor will be deceived by the information. Misleading signals may occur if the way in which information that is essentially accurate is presented, may lead to false impressions. Moreover, a misleading signal may be sent by information whose content is accurate but incomplete, i.e. if certain key aspects that are necessary for an understanding on the part of the investors are omitted, thus producing an incorrect overall picture.

If a responsible person (or a person who has taken ownership of the information) recognises that the information is false or misleading, he or she has an obligation to correct it. The disseminated information must then be correspondingly corrected, completed or updated, if applicable, in the relevant form.

False or misleading signals can be sent in particular through ad hoc disclosures that are not made public or only made public with a delay. Under Article 17(1) of the MAR, inside information, in other words information that is likely to significantly affect the price (Article 7(1) of the MAR), must be made public as soon as possible. Under certain conditions governed by Article 17(4) of the MAR, the issuer is permitted to delay disclosure to the public.¹ Disclosure can be delayed if immediate disclosure is likely to prejudice the legitimate interests of the issuer and delay of disclosure is not likely to mislead the public. In addition, the issuer must be able to ensure the confidentiality of that information. All of these conditions must be satisfied.

If the conditions for a delay are not satisfied, and if the issuer fails to disclose inside information publicly as soon as possible, this may constitute market manipulation. This is because the missing information may send false or misleading signals.

This also applies to a case where the conditions for delaying public disclosure stop applying at a later date. In this case, the information must be subsequently disclosed to the public as soon as possible (Article 17(7) of the MAR). If the information is not subsequently disclosed to the public, withholding the information from the public may send false or misleading signals to investors and meet the definition of market manipulation.

Both for the case in which false or misleading signals are actively given and for the case when information is withheld, the infringement under point (c) of Article 12(1) of the MAR presupposes a subjective element. Point (c) of Article 12(1) of the MAR sets out that the person disseminating the information knew, or ought to have known, that it was false or misleading. This means that not only positive knowledge, but also negligent ignorance, are covered. The benchmark for identifying “ought to have known” must be determined objectively.

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