The Autorité des marchés financiers says it has seen a substantial drop in the number of late insider reports since it began imposing monetary penalties for the offence.

Since January 1, 2006, the AMF has levied administrative monetary penalties of $100 per day for late insider reports. As well, the AMF publishes a list of late insider reports in its weekly bulletin.

In the year prior to the application of the new penalties, late filings totalled 1,948 (8.6%) of the 22,550 transactions reported via the System for Electronic Disclosure by Insiders (SEDI). After the new penalties came into effect in 2006, the rate fell by nearly half, to 4.9%, with 1,265 late filings out of a total of 26,002 transactions. In 2007, it fell further to 3.3%, with 838 late filings out of a total of 25,271 transactions.

“The new measures were implemented to penalize insiders who failed to meet their filing obligations. Now, nearly two years later, it is clear that the strategy has been successful, as the rate of late insider reporting has dropped 61%, from 8.6% in 2005 to 3.3% in 2007,” says Louis Morisset, superintendent, securities markets.

“These administrative penalties are harsh—in fact, they are the toughest in the country—but we feel that the measures were necessary. Yet despite our sustained efforts to raise awareness in the past few years, too many insiders are still not complying with the regulation,” says Morisset. The AMF therefore intends to continue to remind insiders of their obligations and to take the appropriate steps with repeat offenders, in particular through penal proceedings.

Morisset stresses that a person who files late insider reports commits a serious offence, since he deprives investors of information that could influence their investment decisions. “The purchase or sale of securities by senior officers of public companies is important information for market participants which must be provided within the specified time,” he adds.