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Duties & powers Investigations & inspections: How investigations and inspections are conducted

The AMF conducts investigations and inspections

Published on May 27, 2013

Investigations and inspections are conducted by AMF investigators and inspectors, who work closely with other French and foreign authorities that supervise the banking and finance industries. The Board may decide to initiate sanction or settlement proceedings on the basis of the reports relating to investigations and inspections.

Investigations

Purpose

The purpose of investigations is to identify market offences, whether they are committed by a listed company, an individual or institutional investor, or a market professional.

Scope

Investigations are conducted into facts or events that could constitute a breach of market laws and regulations, such as:

  • market abuse, i.e. insider dealing, price manipulation or dissemination of false information
  • anything that could impair investor protection or interfere with orderly market operation (in terms of financial disclosures provided by listed companies or the marketing of financial instruments)
  • trading by companies and their executives in the securities of these companies.

Opening an investigation

The AMF Secretary General takes the decision to open an investigation, based on observations gathered during market supervision, monitoring of listed companies, information sent to the AMF or at the request of foreign authorities. The Secretary General names the investigators.

Investigation procedure

The investigation procedure is governed by law and the AMF General Regulation. An Investigation Charter published in September 2012 describes the principles of good conduct for AMF investigators, as well as the expectations placed on persons summoned in connection with an investigation. An investigation comprises six stages.

  1. Powers of investigatorsInformation may not be withheld from investigators on professional secrecy grounds except by officers of law or for reasons of national security. Investigators have the power to:
    > request any document
    > interview anyone who may be useful to the progress of the investigation
    > enter business premises
    > carry out house searches and seize documents based on a reasoned order from a judge with territorial jurisdiction.

    The investigators gather information, including press releases issued by listed companies, trading data, auditor reports, correspondence, diaries, bank statements, phone records, phone tapes from trading rooms and international requests.
  2. The investigators analyse the data.
  3. They conduct interviews.
  4. Before closing the investigation, the AMF Investigations Division sends a letter to potential respondents setting out its analysis of the factual and legal information gathered during the investigation. The persons contacted have one month to respond.
  5. The investigators draft an investigation report that indicates whether the facts constitute market offences of an administrative and/or criminal nature.
  6. The Secretary General forwards the report to the AMF Board. The report is not made public. The AMF is bound by professional secrecy and presumption of innocence obligations.

Possible outcomes of an investigation

After it has reviewed the investigation report, the Board, which is the AMF’s prosecutorial authority, decides what action to take, which may include one or more of the following:

Two-person investigation teamInvestigations are usually carried out by a team of two specially appointed and individually designated inspectors. Investigators come from a wide range of professional backgrounds; they include auditors, accountants, actuaries, lawyers, legal specialists, engineers, judges, law enforcement officers, tax inspectors, Banque de France inspectors and market professionals. As a result, they have the technical and legal expertise needed to carry out their duties.

  • serve a statement of objections to the respondent and open sanction proceedings
  • serve a statement of objections to the respondent and propose a settlement
  • forward the case to the Public Prosecutor if the evidence in the report points to a criminal offence
  • forward the case to other French or foreign administrative authorities if the report points to matters within their jurisdiction
  • send a letter of observations to persons under investigation to remind them of current regulations
  • close the case.

Inspection of professionals

Purpose

The purpose of AMF inspections is to ensure that professionals regulated by the AMF and the individuals acting under their authority or on their behalf meet the professional obligations set out in the Monetary and Financial Code, the AMF General Regulation and AMF-approved professional rules.

Scope

Inspections cover:

  • investment management companies, investment firms, credit institutions and investment services providers (ISPs)
  • the market operators that run regulated markets and multilateral trading facilities (MTFs), including Euronext Paris SA, the member of the NYSE Euronext Group that operates the Euronext, MONEP and MATIF regulated markets, as well as the Marché libre and Alternext, two MTFs. The AMF also inspects other ISP-run MTFs, including MTS France, Powernext Derivatives and Alternativa
  • post-trade infrastructures, including LCH.Clearnet SA, a clearing house, and Euroclear France, a central securities depository
  • financial investment advisers (FIAs) and their professional associations.

Opening an inspection

Powers of inspectors Based on the provisions of the AMF General Regulation, inspectors may:
> requisition any document from an audited entity
> order any information to be retained
> gather explanations from persons acting on behalf of or under the authority of an audited entity and consult third parties to verify information
> enter business premises.

The AMF Secretary General takes the decision to open an inspection, following a risk-based approach that considers events, behaviour or incidents that may constitute a breach of professional obligations. The Secretary General appoints the inspectors and gives them a letter of assignment that indicates the purpose of the inspection.

Inspection procedure

The inspection procedure is governed by law and the AMF General Regulation. An Inspection Charter published in December 2012 explains the legal framework. An inspection comprises the following stages:

  1. A copy of the letter of assignment given to each inspector is provided to the audited entity when contact is made for the first time.
  2. The assignment lasts as long as necessary to complete the investigations. The lead inspectors provide regular progress reports to the audited entity.
  3. Once the investigations are complete, the inspectors verbally present the main findings to the representatives of the audited entity, respond to any questions and gather their comments.
  4. Once the inspection is over, the findings are covered in a report sent to the audited entity, which may submit written observations.
  5. Action is taken based on the inspection report and the observations of the audited entity.

Possible outcomes of an inspection

The Board, which is the AMF’s prosecutorial authority, decides what action to take, which may include one or more of the following:

  • send a follow-up letter to the audited entity advising it of corrective measures that need to be taken to remedy any possible deficiencies
  • serve a statement of objections to the respondent and open sanction proceedings
  • serve a statement of objections to the respondent and propose a settlement
  • forward the case to the Public Prosecutor if the evidence in the report points to a criminal offence
  • forward the case to other French or foreign administrative authorities if the report points to matters within their jurisdiction
  • issue an injunction.

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Legal information
Head of publications: Florence Gaubert, Executive Director of AMF Communication Directorate.
Contact: Communication Directorate – Autorité des marches financiers 17 place de la Bourse – 75082 Paris cedex 02