The Law of December 4, 1990 regarding financial operations and financial markets prohibits the use of privileged information by insiders and constitutes the framework of anti-insider-trading legislation in Belgium.

The first judgements in cases of insider trading have been recently rendered by two different criminal courts.

In the first case, it was alleged by the Public Prosecutor that a director of a Belgian listed company had disclosed to her husband the fact that the company in question would distribute a special dividend on the basis of exceptional profits made on the sale of an important subsidiary. A few hours before the information was disclosed to the press, shares of this company were purchased on the stock exchange through a broker acting on behalf of a company of which the husband was the managing director.

The criminal court of Ghent ruled on October 27 that the buyer had obtained privileged information from his wife in breach of the provision of the Law of December 4, 1990 prohibiting members of the Board of Directors of listed companies from using inside information to recommend to a third party to buy or sell securities.

The alleged tipper and tippee both received a suspended three-month jail sentence and heavy fines (BEF 500,000 each and, for the tippee, three times the estimated profit made by using the privileged information). Furthermore, both persons are prohibited from performing any mandate as director of a commercial company for the rest of their lives. An appeal will be lodged against this decision.

On the very same day, the criminal court of Charleroi fined an accountant a mere BEF 50,000 for buying on the stock exchange securities of a company for which he was the accountant, knowing that the company in question had done particularly well during the previous financial year. The profits made in this case appear insubstantial.

These decisions are intended to serve as a deterrent to insider trading practices, as commentators find these judgements tough on convicted persons.

The content of this article is intended to provide general information on the subject matter. It is therefore not a substitute for specialist advice.

De Bandt, van Hecke & Lagae - Brussels. (32-2) 517.95.66.