It is deemed to be necessary for public interest to issue a public announcement regarding Article 107/2 “information based market manipulation” of the new Capital Markets Law (“CML”) No 6362, so as to provide guidance to the article and its scope. Nonetheless, explanations provided below aim only to give brief and general information about “information based market manipulation” and do not provide all the necessary legal information that has to be taken into consideration on a case by case basis. Taking expert legal advice is always recommended.
The new Capital Market Law No. 6362 which came into force on December 30, 2012 introduces a new framework to financial markets and aims to establish and maintain a more robust legal regime for market participants with a view to strengthening investor protection.
“Information based market manipulation” is penalized according to both the new CML (Article 107/2) and the repealed Capital Markets Law No. 2499 (Article 47/I.A-3). The table below demonstrates that there is no significant difference that could entail an intervention to market mechanisms between regulation of information-based market manipulation in both the new and the old CML. Furthermore; information based manipulation which is featured in both the old and the new CML has been regulated as a form of "market manipulation" in the 2003/6/EC "Market Abuse Directive" of the European Union. Therefore, the regulation in Article 107/2 has a more objective, clear nature and is in line with the international regulations.
CML No. 2499 Art. 47/I.A-3
CML No. 6362 Art. 107/2
Any natural person, authorized person of legal entities and those acting in concert, that provides information, news and comments that are misleading, false or deceiving and that could influence the value of capital market instruments or fails to disclose information which he/she should disclose shall be imprisoned from two to five years and fined juridically from five thousand days up to ten thousand days."
"Any person who provides or disseminates information, spreads rumors, gives news or prepares reports that are misleading, false or deceiving , , with an aim to influence the value or price of capital market instruments or investors' decisions shall be imprisoned from two to five years and fined juridically up to five thousand days."
According to the previous CML, in order to initiate proceedings, it would be sufficient that the information, news or comments at hand should be reasonably likely to affect the value of the capital market instrument. Therefore, the intention of the persons who declared or disseminated the information, news or comments had been disregarded. The new CML, in Article 107/2, first gives a detailed list of actions that constitute a criminal offence. Second, different from the old CML, the new CML further requires that these actions shall constitute a criminal offence, provided that the special intention, which is the "intention to influence the price and the value of the capital market instruments or affect investment decisions." has been proved. This means that the new CML has increased the standards of burden of proof and rendered the article clearer and more objective.
In this respect, the new CML aims to provide a broader playing field for market analysts and commentators acting in good faith and free from disguised intentions. The reason for the use of new terms such as “spreading rumors”, “preparing reports” or “disseminating these” should be attributed to the aim of clearly determining the actions that may constitute the criminal offence. There is no reasonable ground to conclude that the scope of the actions that constitute the criminal offence has been widened. In other words, the standards that the investment analysts or reporters should take into consideration while carrying out their profession have not been tightened when compared to the old legislation. On the other hand, in case an action carries the attributes explained above, the Capital Market Board, under the duty of protection of investors and providing proper functioning of markets, shall initiate a proceeding as the case may require.