Agreement with regulator: what punishment companies can avoid
The Bank of Russia has approved a list of administrative measures that companies and individuals may avoid if they fail to comply with anti-insider legislation, provided that they sign an agreement with the regulator.
The regulator will not issue compliance orders to the parties to such agreements, suspend their trading on the exchange, and cancel their licences of professional securities market participants. This is stipulated by the Bank of Russia ordinance.
The mechanism of an agreement, or a deal, with the regulator was established last year by the law on countering the misuse of insider information and market manipulation. According to this mechanism, individuals or companies that are subjects of an administrative case initiated by the Bank of Russia can be exempted from liability if they pay a certain amount to the budget and take measures in order to prevent such deviations from the law in the future. If the party to such an agreement violates it, the regulator will invalidate these exemptions.
The new mechanism should help promote confidence in the market, reduce the period of uncertainty for its participants, help them mitigate reputational and financial risks, and save the funds that the regulator uses to conduct an investigation.
The ordinance has been registered by the Ministry of Justice and becomes effective on 26 August 2022.