Insider Trading and Manipulation of Negotiable Securities Offenses

On October 14, 2011 the Minister of Justice and Human Rights submitted a bill to the Argentine Congress to amend the Criminal Code with respect to misconducts of directors, members of the supervisory committee, shareholders, representatives of shareholders and any other person who by reason of his or her profession learns about privileged information regarding listed companies (the "Bill").

The Bill introduces as an offense, among others, insider trading, and it penalizes the use and disclosure of information and sensitive data for the negotiation of securities. The penalty proposed is of two to four years imprisonment or a fine equivalent to the amount involved in the transaction and disqualification for up to five years. Such penalties may be aggravated depending on the position held by the offender or on the basis of the benefits obtained or damages caused.

The Bill proposes the incorporation of the manipulation of the price of securities as a crime, imposing a sanction on any person attempting to manipulate the prices of securities by means of false information, fake negotiations, co-ordinated actions among the most relevant holders to grant the appearance of liquidity or to determine a certain price. In these cases, the penalty is of two to four years imprisonment and it may be aggravated.

Additionally, unauthorized financial intermediation and fund raising are also proposed to be added as crimes, punishing any person incurring in financial intermediation and the raising of funds in the stock market without the authorization of the relevant authorities, the inclusion of false facts when documenting a transaction, seeking to obtain benefits or cause damages. The penalty is of two to eight years imprisonment, a fine for two to eight times the value of the transactions and a fifteen year special disqualification.

The Bill introduces criminal liability on legal entities when offenses are committed on account of or through a legal entity. The Bill includes two guidelines: (i) for legal entities within the public offering regime, sanctions should be applied without damaging shareholders or bondholders; and (ii) for legal entities during bankruptcy proceedings, sanctions should not cause damage to creditors.

This Bill is one of the measures designed to avoid the sanctions of the Financial Action Task Force (FATF), whose purpose is to combat money laundering and terrorist financing. Argentina has been on the intensive monitoring list since October 22, 2010, because it has not show compliance with the FATF 40 recommendations against money laundering and terrorist financing.

The Bill has not yet been considered by either of the houses of Congress.