The scope of violations in the securities market resulting in criminal liability has been widened | Practical Law

The scope of violations in the securities market resulting in criminal liability has been widened | Practical Law

This article is part of the PLC Global Finance November e-mail update for the Russian Federation.

The scope of violations in the securities market resulting in criminal liability has been widened

by White & Case LLP
Published on 15 Dec 2009 • Russian Federation
This article is part of the PLC Global Finance November e-mail update for the Russian Federation.
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The President has signed a new law amending the Criminal Code and Article 151 of the Criminal Procedure Code. The new law aims to protect the rights of investors on the securities market. It introduces a number of new types of criminal offence and sets the penalties for their breach.
On 30 October 2009 the President signed Federal Law No. 241-FZ "On Amending the Criminal Code of the Russian Federation and Article 151 of the Criminal Procedure Code of the Russian Federation." The Law entered into force on 14 November 2009.
The Law aims to protect the rights of investors on the securities market and introduces the following new types of criminal offences:
  • Violation of rules for registration of rights to securities.
  • Price manipulation on the securities market.
  • Obstruction of the exercise of, or unlawful limitation of, the securities' holders' rights.
These actions will result in criminal liability if they cause major losses or gains (the threshold is currently at RUB1 million (about US$34,700)).
The following penalties may be imposed on a person charged with committing the above crimes:
  • a fine;
  • removal of the right to hold certain positions or be engaged in specific activities; and/or
  • imprisonment (depending on the type of crime and certain other factors).
In particular, the price manipulation may entail:
  • imprisonment for a period of five to seven years;
  • a fine in the amount of RUB1 million (about US$ 34,700) or the salary (or other income) of a convicted person for three years (the fine may not be imposed in certain cases); and
  • removal of the right to hold certain positions or be engaged in specific activities for a period of up to three years (the removal of these rights may not be imposed in certain cases).