The ECJ Decision in Spector Photo Group and the Presumption of Use of Inside Information: A Blessing for the Administrative Enforcement of Market Abuse in the EU?

Abstract

In its Spector judgment, the Court of Justice of the EU held that a primary insider is presumed to have used inside information as soon as he has effected a securities transaction while in possession of inside information. This presumption can however be rebutted under circumstances where, in view of the purposes of the Market Abuse Directive, the transaction does not constitute an unfair use of inside information. In this contribution, we analyse the implications of the Spector judgment for the enforcement of the insider dealing prohibition. Furthermore, we highlight the difficulties raised by the practical application of the conditions under which the ECJ allows to rebut the presumption of use of inside information. We illustrate this with reference to the operation of stock option plans in listed companies.