In the previous articles of Dadista Law Institute about legal disputes in the stock market and over-the-counter, it was briefly mentioned that stock market disputes and lawsuits are divided into three categories, one of which is stock market crimes. In this article, we try to investigate this category of crimes.
What factors cause Stock market violations and lawsuits?
After the passage of many years, factors such as the expansion of the volume and development of the stock market, the establishment of new financial institutions, the diversification of the activities of brokerage companies, as well as the increase in the number of operations or transactions related to securities, caused many anomalies and violations to occur in this area. which are referred to as stock market lawsuits. In fact, stock market lawsuits are “any act or omission for which punishment is determined by law.” These types of crimes are mentioned in the sixth chapter of the Securities Market Law approved in 2014. In the following, we mention some criminal titles related to the stock market.
Abuse of confidential information
According to the first paragraph of Article 46 of the aforementioned law, if a person who has confidential information related to securities entrusted to him according to his duty. He has committed a crime if he uses it in any way to the detriment of others or for his own benefit or for the benefit of a person he has represented on their behalf in any way, before public release. Confidential information is information that is directly or indirectly related to securities, transactions or their issuers. Disclosing them before the due date can affect the price of securities or the decision of investors to trade these securities. The reason for the criminalization of this behavior is that it deprives people of trust in the stock market, and this leads to negative consequences such as the loss of investors’ capital or their desire to invest.
Providing causes for its disclosure and publication in other than prescribed cases
This crime is mentioned in paragraph A of Article 46. Since “information related to securities” is the basis for the decision-making of traders and investors in stock market lawsuits and investments, it is very important, and therefore its disclosure or its publication in cases other than those prescribed by law is considered a crime.
Crime of trading based on confidential information
Previously, confidential information was defined. According to paragraph 2 of article 46, if a person initiates a securities transaction using confidential information, he has committed a crime.
According to the note of the mentioned law, the persons who somehow get informed about the confidential information of the company are:
1- People who have direct access to the source of confidential information, which includes members of the Supreme Council of Stock Exchange Claims, members of the organization’s board of directors, managers and partners of the organization’s audit institute.
2- People who do not have access to the source of confidential information, but because they are under the care of the first group or have a family relationship with them, they can access the confidential information of this group of people.
The crime of market manipulation
The crime of market manipulation is mentioned in the third paragraph of Article 46. This paragraph stipulates: Any person whose actions usually lead to a misleading appearance of the process of securities transactions or creating false prices or enticing people to conduct securities transactions, has committed a crime.
One of the situations of stock market manipulation is done through increasing or decreasing stock trading; In such a way that the criminal knowingly and intentionally causes the share price to decrease in order to buy a large amount of that share and make a profit. Also, where people who have a lot of shares of a company, with bad intentions, give a certain direction to the market and make the stock price go up in order to sell their shares, this state of market manipulation occurs. Another form of market manipulation is when the criminal makes the stock price go up or down by spreading false information.
In the first case, market manipulation is done only through stock trading (supply and demand), but in the second case, this manipulation is done only by spreading false information. The reason for criminalizing this behavior is that it affects the prices and decisions and desires of investors.
The crime of publishing an advertisement or subscription announcement without the approval of the stock exchange organization
This crime is mentioned in the fourth paragraph of Article 46. This paragraph stipulates: Any person who without complying with the provisions of this law publishes an advertisement or subscription announcement for the purpose of public offering of securities is a criminal. Therefore, any subscription for the purpose of public offering of securities must be done after obtaining the license and approval of the Securities and Exchange Organization. Otherwise, the guilty person (company founders or publisher managers) commits a crime.
The crime of not providing important information to the stock exchange organization or related stock market lawsuits
According to the second paragraph of Article 49, if any person who is obliged to provide all or part of important information, documents or documents to the relevant organization or stock exchange according to this law and refuses to do so, he has committed this crime.
The crime of abuse by brokers, traders or market operators of securities and clients’ funds
This crime is mentioned in Article 50. This article stipulates: If a broker, broker/trader or market operator, who has the securities and funds entrusted to him to carry out the transaction and he is obliged to keep them in separate accounts, contrary to the regulations and used for his own or others’ benefit will be sentenced to the punishment prescribed in Article 674 of the Islamic Penal Code.
The crime of misusing information, documents or false reports related to securities
According to the fourth paragraph of Article 49, if a person knowingly and intentionally misuses any false information, documents, documents or reports related to securities in any way, he is considered a criminal.
The crime of engaging in activities that require permission or self-identification under those titles
According to the first paragraph of Article 49, any person who, without complying with the provisions of this law, engages in activities such as brokerage, broker/dealer or market operator that requires obtaining a license, or introduces himself under any of the mentioned titles is guilty.
Crime of direct or indirect disclosure of confidential information by broker, broker/dealer, market maker and investment advisor
According to Article 48, if the above mentioned persons reveal the secrets that they were informed of or that are in their possession without permission, they will be considered guilty and punished according to Article 648 of the Islamic Penal Code.
The crime of disobeying the regulations in preparing, reviewing, commenting and certifying documents and documents, in order to submit them to the organization
The third paragraph of Article 49 refers to these crimes. This paragraph declares: any person who is responsible for preparing documents, documents, information, registration statement or subscription notice and the like for submission to the organization, as well as any person who is responsible for reviewing and commenting or preparing a financial, technical or economic report or any He is responsible for verifying the aforementioned documents and information, and if he violates the provisions of this law in the implementation of his assigned duties, he has committed a crime.
The crime of providing false information to the stock exchange organization or using fake documents against this organization
According to Article 47, persons who provide or confirm false information or fake documents to the organization or the stock exchange, or who use fake information, documents, and documents in preparing reports on the subject of this law, according to the Islamic Penal Code They are punished.
Prosecution of Stock market crimes
According to Article 52 of the Securities Market Law, the stock exchange organization is obliged to collect the documents related to the stock market lawsuits and inform them to the competent judicial authorities (which in this case are the prosecutor’s office and the general criminal court) and according to Pursue the case as a plaintiff.
Dadista Law Institute, under the management of Dr. Ali Rofegar, has an experienced staff of legal advisors and basic lawyers. This institution has the ability to answer all the questions of our dear contacts in the field of stock market and non-stock market. It will also accompany the applicants during the handling of the stock market lawsuits in this field.