Insights Court of Justice of European Union rules that disclosure by a journalist of inside information pre-publication of an article reporting rumours in relation to listed companies is lawful if necessary and proportionate

A journalist published two articles on The Daily Mail website reporting rumours about takeover bids in relation to Hermès (by LVMH) and Maurel & Prom. The prices indicated in the articles were significantly higher than the share prices reported on Euronext. The publication resulted in a considerable increase in the price of the shares. Shortly before the two articles were published, purchase orders were made for the shares in question by certain British residents, who then sold the shares after publication of the articles. The Autorité des marchés financiers française (AMF) (Financial Markets Authority, France) imposed a €40,000 on the journalist because he had told the British residents about the forthcoming publication of his articles and had therefore disclosed “inside information”.

On appeal, the Paris Court of Appeal asked the CJEU to interpret EU law on insider dealing. It asked whether information relating to the forthcoming publication of a press article reporting a market rumour should be regarded as inside information, the disclosure of which is prohibited. It also asked whether disclosure in the context of journalistic activity amounted to an exception to that prohibition.

The CJEU held that information relating to the forthcoming publication of a press article reporting a market rumour concerning an issuer of financial instruments is capable of constituting information “of a precise nature” and, therefore, of falling within the scope of the concept of “inside information”, where it mentions, inter alia, the price at which the securities will be purchased, the name of the journalist who authored the article and the publisher.

The disclosure of inside information for the “purpose of journalism” is justified under EU law by virtue of the provisions on freedom of the press and freedom of expression. The “purpose of journalism” can cover investigative work by the journalist in preparation for publication in order to verify rumours, the CJEU said.

However, the CJEU said, disclosure of inside information by a journalist is only lawful where it is regarded as being necessary for the exercise of his or her profession and as complying with the principle of proportionality. It is for the national court to consider whether: (i) it was necessary for the journalist seeking to verify a market rumour to disclose to a third party not only the content of that rumour, but the fact that an article reporting that rumour would soon be published; and (ii) the restriction on the freedom of the press, which prohibiting such disclosure would entail, is excessive, considering the potentially dissuasive effect on the exercise of journalistic activity and the rules and codes to which journalists are subject, by comparison with the harm that such disclosure would cause, not only to the private interests of investors but also to the integrity of the financial markets. (Case C-302/20 Mr A v Autorité des marchés financiers (AMF) EU:C:2022:190 (15 March 2022) — to read the judgment in full, click here).