Print from the website of the AMF
Published on May 28, 2013
The AMF Enforcement Committee exercises its power to impose sanctions once the Board has decided to open sanction proceedings. The law defines the procedure, the persons who may be sanctioned, the nature of sanctions, maximum fines and the public nature of hearings and decisions. The Enforcement Committee, considered to be the AMF’s enforcement body, comprises 12 members, none of whom sit on the Board. The committee enjoys full independence from the AMF Board when making decisions.
The Enforcement Committee may issue sanctions against:
The applicable sanctions vary depending on the type of respondent and offence. Where issued, fines are paid either to the Treasury or to the guarantee fund to which the professional belongs.
Person sanctioned | Type of breach | Disciplinary sanction | Fine (*) |
---|---|---|---|
Professional under AMF supervision, such as an investment services provider or management company. | Individual acting under the authority or on behalf of a professional | Warning, reprimand, temporary or permanent ban on providing some or all services | Up to €100 million or ten times any profit earned |
Individual acting under the authority or on behalf of a professional | Failure to meet professional obligations | Warning, reprimand, temporary suspension or withdrawal of professional licence, temporary or permanent ban on conducting some or all businesses | Up to €300,000 or five times any profit earned |
Individual acting under the authority or on behalf of a professional | Market abuse | Warning, reprimand, temporary suspension or withdrawal of professional licence, temporary or permanent ban on conducting some or all businesses | Up to €15 million or ten times any profit earned |
Other persons (issuers and their executives, auditors, others) | Market abuse | N/A | Up to €100 million or ten times any profit earned |
(*) For breaches committed on or after 24/10/2010 (cf. Act 2010-1249 of 22 October 2011).
After reviewing inspection and investigation reports, the AMF Board decides whether to open sanction proceedings. If it does initiate proceedings, it serves a statement of objections on the person whose conduct is in question. The statement is also sent to the Chairman of the Enforcement Committee. The respondent has two months to submit observations to the Chairman of the Enforcement Committee and may be assisted or represented by a counsel. The Board receives a copy of this document and may issue a written response.
The Chairman of the Enforcement Committee appoints a committee member to act as rapporteur for the case and determines whether it will be assigned to the full committee or one of the six-member divisions. The rapporteur may interview the respondent, the Board representative or anyone else deemed necessary. If the rapporteur considers that there are additional grounds for complaint or that the charges concern persons other than the respondent, he or she may refer this matter to the Board.
Disqualification of an Enforcement Committee member
If there is a serious reason to doubt his or her impartiality, the rapporteur, or any member of the Enforcement Committee, may be disqualified either at the person’s own request or at the request of the respondent (Article L.621-15 III bis of the Monetary and Financial Code).
The rapporteur draws up a report on the findings of the examination, which is sent to the respondent and to the Board representative, both of whom are entitled to add their observations. The respondent is then ordered to appear before the Enforcement Committee.
Enforcement Committee hearings are held in public, unless the chair of the committee or division decides to conduct some or all of the proceedings in camera for the sake of public order, national security or if a public hearing would compromise business secrecy or any other legally protected secret. Hearings are announced on the AMF website and usually take place at the offices of the AMF.
Hearings are based on an adversarial procedure. Firstly, the rapporteur presents the case. The Board representative explains the objections and proposes a fine and/or disciplinary penalty. The Director General of the Treasury may also submit observations. The respondents along with any advisors then present the arguments in defence at the end of the hearing.
When the hearing is complete, the Enforcement Committee rules on the case. Only its members and an AMF employee acting as secretary are present. Decisions are reached by majority vote. Unlike the Chairman of the AMF Board, the Enforcement Committee Chair does not having a casting vote in the event of a tie.
The Enforcement Committee makes a reasoned decision, setting out the factual and legal grounds on which the ruling is based.
The decision is communicated to:
The Enforcement Committee’s decision is published on the AMF website, unless publication could seriously disrupt financial markets or cause undue damage to the parties involved. The committee may also have the sanction decision published in any publication, journal or report it chooses, at the cost of the respondent. By publishing its decisions, the committee reminds participants of the legal rules and explains the reasoning, content and purpose of the sanctions imposed. Thus informed, professionals are in a better position to understand the rules they must abide by.
Enforcement Committee decisions are subject to appeal by the respondent and by the AMF Chairman, after agreement from the Board, within a period of two months of the notification date.
Appeals are heard by:
When the AMF was established in 2003 the Enforcement Committee was set up to ensure that the authority’s enforcement powers were consistent with the principles of due process and fair trial. Separating the prosecutorial and enforcement bodies ensures compliance with the requirements of Article 6 of the European Convention on Human Rights. Read on for a short history of the AMF’s enforcement powers.
Separation of prosecutorial and enforcement powers: other examples
Other regulatory authorities also have an Enforcement Committee that is separate from the Board, including the ACP, the Autorité de Régulation des Jeux en Ligne (ARJEL), which regulates online gambling, and the Commission de Régulation de l’Energie (CRE), the energy regulator, which has a separate Dispute Settlement and Enforcement Committee.
Financial Security Act 2003-706 of 1 August 2003 established the AMF and its Enforcement Committee, putting an end to the previous situation, which involved several enforcement authorities (Conseil des Marchés Financiers, Commission des Opérations de Bourse, Conseil de Discipline de la Gestion Financière). Now the AMF Enforcement Committee alone is empowered to issue administrative and financial penalties. The law clearly separates the Board and its Enforcement Committee and thus separates the authority’s prosecutorial and enforcement powers (Article L. 621-2, I of the Monetary and Financial Code). Accordingly, each stage in sanction proceedings is assigned to a distinct collegial authority (Article L. 621-15 I of the Monetary and Financial Code) and the functions of Enforcement Committee member may not be combined with those of Board member (Article L. 621-2, IV of the Monetary and Financial Code).
In the wake of rulings by the Conseil d’État in 2006 and 2007, in which several Enforcement Committee decisions were overturned owing to non-impartiality of an Enforcement Committee member, Act 2007-1774 of 17 December 2007 introduced the ability to disqualify Enforcement Committee members (Article L. 621-15, III bis of the Monetary and Financial Code) either at their own request or at the request of the respondent. The implementing decree for this legislation was published on 2 September 2008.
In 2008 Economic Modernisation Act 2008-776 of 4 August 2008 increased the maximum fine that the Enforcement Committee could impose on AMF-supervised ISPs and professionals and on persons charged with market abuse: the limit was raised from €1.5 million to €10 million (or ten times any profits earned). Meanwhile, Decree 2008-893 of 2 September 2008 introduced the principle of Board representation at Enforcement Committee hearings. The representative, appointed by the AMF Chairman, may be a Board member or a member of an AMF department (Article R. 621-40 I bis and II of the Monetary and Financial Code).
Banking and Financial Regulation Act 2010-1249 of 22 October 2010 put the final touches to the operating arrangements and transparency of the AMF enforcement process.
During the sanction procedure, the Board representative may:
During the hearing, the representative, who does not have a vote, may:
Once the decision is made and with the Board’s agreement, the Chairman of the AMF may appeal against Enforcement Committee decisions.
The legislation provided for sanction decisions to be published as an exception, but they were eventually published in principle. The Banking and Financial Regulation Act introduced measures to enhance transparency still further by making sanction hearings open to the public.
The maximum fine that the Enforcement Committee may issue was increased again:
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