AMF sanctions: distinction and scope of administrative and disciplinary powers

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The French financial sector is a complex ecosystem, whose stability and investor protection are ensured by one major player: the Autorité des marchés financiers (AMF). This independent public body has extensive powers to regulate markets, supervise professionals and, where necessary, impose sanctions. Understanding the nature and scope of these sanctioning powers, whether administrative or disciplinary, is essential for anyone working in this environment. Our firm offers you a detailed exploration of this legal framework, to shed light on the contours of the AMF's intervention and its practical implications, as a complement to our full guide to the AMF's sanctioning powers.

The historical legacy of the AMF's sanctioning powers

The Autorité des marchés financiers (AMF), as we know it today, was created by the Financial Security Act of 1 August 2003. This major reform led to the merger of several pre-existing authorities: the Commission des Opérations de Bourse (COB), the Conseil des Marchés Financiers (CMF) and the Conseil de Discipline de la Gestion Financière (CDGF). This consolidation enabled the AMF to inherit and unify sanctioning powers that had previously been scattered, thereby strengthening its ability to protect savings, inform investors and ensure the smooth operation of financial markets.

Prior to this unification, the COB, for example, had already been invested with the power to impose administrative sanctions by the law of 2 August 1989. Although this power was criticised at the time for the cumulation of powers it entailed (drafting regulations, enforcing them and sanctioning non-compliance), the principle has not been called into question. The AMF has thus consolidated an approach in which market regulation is not the exclusive preserve of the criminal courts, but also incorporates a strong administrative dimension.

The AMF's administrative sanctioning powers: market-oriented repression

The AMF's administrative sanctioning powers are repressive in nature. Its purpose is to sanction breaches of general rules that affect the orderly operation of the market. Its scope, both material and personal, is particularly broad, enabling it to intervene widely to ensure market integrity.

Scope of administrative penalties: extended

Article L. 621-15 of the Monetary and Financial Code (CMF) sets out the breaches covered by administrative sanctions. The scope of application is very broad, encompassing acts that relate both to the nature of the act performed and the financial instruments concerned. The AMF can sanction anyone who engages, or attempts to engage, in insider dealing, market manipulation or dissemination of false information, as defined by Regulation (EU) 596/2014 on market abuse (MAR). This also includes recommending or inciting such transactions, or unlawfully disclosing inside information.

Beyond these specific breaches, the definition extends to any transgression of obligations designed to protect investors against these practices, or any other offence likely to undermine the protection of investors and the proper functioning of the markets. This also includes breaches of obligations relating to the fight against money laundering and terrorist financing. The AMF's interpretation is often teleological, i.e. it is based on the objective of protecting investors and the market, which gives its actions significant scope. For example, the dissemination of inaccurate information in a prospectus may be sanctioned, even though the text is aimed more broadly at breaches "likely" to disrupt the market.

To find out how these breaches are then dealt with and punished, read our article on the AMF sanction procedure.

Personal scope of administrative penalties: who is concerned?

The expression "any person", used in Article L. 621-15, II, c of the Monetary and Financial Code, reveals the extensive nature of the AMF's personal jurisdiction. This scope is not limited to market professionals or persons with whom the AMF has prior authorisation. It includes non-professionals, natural and legal persons, and even entities such as auditors, journalists or ordinary investors in possession of inside information.

An important feature of the AMF's administrative sanctioning powers is that they are not subject to the principle of personal liability as applied in criminal law. In practice, the AMF considers that legal entities can be sanctioned for a breach committed by one of their employees. The case law of the Conseil d'État confirms this approach, specifying that breaches committed by employees may be attributed directly to the legal entity, provided that they are acting within the scope of their duties, unless the company can demonstrate that it has implemented measures to prevent such breaches. This approach broadens the basis of liability and the AMF's ability to reach organisational entities beyond individuals.

Administrative penalties: dissuasive ceilings

Administrative penalties are exclusively pecuniary in nature. Their ceilings, considerably increased by the Act of 22 October 2010, are set at €100 million or ten times the amount of any profits made. This amount may even be increased to 15 % of the sanctioned person's total annual turnover for certain serious breaches relating to European regulations on market abuse or markets in financial instruments.

The amount of the sanction is determined on the basis of several criteria set out in Article L. 621-15, III ter of the Monetary and Financial Code. These criteria include the seriousness and duration of the breach, the quality and degree of involvement of the person concerned, his financial situation and capacity, the size of the gains obtained or losses avoided, the harm suffered by third parties, the degree of cooperation with the AMF, previous breaches, and any other circumstances specific to the person concerned, such as the corrective measures taken. This proportionality requirement is fundamental and makes it possible to adjust the sanction on a case-by-case basis. Moreover, case law considers these sanctions to be "criminal matters" within the meaning of the European Convention on Human Rights, which implies stronger procedural guarantees.

The AMF's disciplinary powers: protecting professionals and their clients

The AMF also has disciplinary powers, inherited from the Conseil des marchés financiers and the Conseil de discipline de la gestion financière. The main purpose of these powers is to protect professionals and their clients by ensuring compliance with professional obligations and rules of good conduct.

Disciplinary breaches: professional obligations and rules of good conduct

Under Article L. 621-15, II, a of the Monetary and Financial Code, disciplinary breaches concern violations of professional obligations defined by European regulations, laws, regulations and professional rules approved by the AMF. This is a vast body of standards, including the "rules of conduct" set out in the AMF General Regulation, which are often drafted in general terms, leaving the AMF a wide margin of discretion.

The purpose of disciplinary powers has changed. Historically focused on protecting a profession, it is now more oriented towards protecting the clients of professionals and, more broadly, the financial market. This evolution reflects a dilution of the traditional notion of 'discipline' in favour of a more global approach to regulation.

It is important to note that the AMF combines its disciplinary powers with those of other supervisory authorities, such as the Autorité de contrôle prudentiel et de résolution (ACPR). Although there is a functional division of powers, overlaps may exist, requiring coordination between these institutions to avoid double prosecution or to ensure that sanctions are consistent.

Persons concerned by disciplinary sanctions: professionals, employees and agents

The AMF's disciplinary powers apply to two broad categories of persons. First, the professionals themselves, whether natural persons or legal entities, designated by Article L. 621-9, II of the Monetary and Financial Code. This list includes investment services providers, collective investment management companies, central depositories, commodity intermediaries, financial analysts and many other direct market participants.

In addition, this jurisdiction extends to their employees and persons acting on their behalf. Directors' liability is particularly extensive, as the Enforcement Committee considers that they are required to supervise and control their employees. A breach committed by an employee may therefore result in the director being held liable for failure to fulfil his or her supervisory obligation, unless he or she can demonstrate that he or she has put in place adequate measures to prevent such acts.

Nature and amount of disciplinary penalties

Disciplinary sanctions are varied and may be moral, professional or pecuniary in nature. Moral sanctions include a warning or reprimand. Professional sanctions, which are more severe, may take the form of a temporary or permanent ban on providing all or part of a service or activity, or the withdrawal of a professional licence. These measures directly affect the individual's ability to operate in the financial sector.

Financial penalties may be imposed in addition to or instead of moral and professional sanctions. Their amount has also been considerably increased. For professionals, the ceiling is identical to that for administrative sanctions, i.e. 100 million euros or ten times the benefit derived from the breach. For employees or agents, the ceiling is 15 million euros or ten times the benefit received, if the amount can be determined. The increase in these amounts underscores the AMF's determination to act as a strong deterrent.

It is important to distinguish between a disciplinary sanction and an administrative decision to withdraw authorisation, even if their effects on professional practice are similar. The distinction lies in the nature of the behaviour: a disciplinary sanction is aimed at a breach of professional rules, whereas the withdrawal of authorisation establishes that the professional no longer fulfils the objective conditions required to carry out his activity.

It is important to note that these sanctions can be appealed, as explained in our article on the right to appeal. appeals against AMF sanctions.

The principle of individual penalties and its implications for MFA sanctions

The principle of individual penalties, which is fundamental to criminal law, raises complex issues when applied to penalties imposed by the AMF, particularly in the case of company reorganisations (mergers, demergers). This principle stipulates that only the offender may be punished.

Historically, case law has diverged between the judicial and administrative orders. The Court of Cassation, in the context of administrative sanctions, initially tended to annul decisions sanctioning companies resulting from a demerger for breaches attributable to the demerged company, invoking the principle of the personality of proceedings and sanctions (Cass. com., 15 June 1999). This means that it emphasised the legal personality of the entity at the time of the facts. On the other hand, the Conseil d'Etat adopted a more nuanced approach to disciplinary sanctions. It ruled that a reprimand could not be imposed on the acquiring company for acts committed by the acquired company, but that a financial penalty could be passed on because of the economic continuity of the company and the universal transfer of assets (CE, 22 Nov. 2000). This divergence between the protection of individuals and the effectiveness of regulation has long been a point of tension. However, developments in legislation and case law are tending to take account of the economic reality of entities, while at the same time ensuring that the fundamental guarantees of the individuals involved are upheld.

The complex relationship with criminal sanctions: the question of non bis in idem

One of the most sensitive issues concerning the AMF's sanctioning powers is how they relate to criminal sanctions, in particular because of the principle of "dual liability". non bis in idemThis means that a person cannot be tried or punished twice for the same acts. For a long time, French law allowed administrative and criminal penalties to be combined, based on the distinction between their legal nature and their different purposes.

However, the case law of the European Court of Human Rights (ECHR), particularly in cases such as Zolotukhin v Russia (2009) and Grande Stevens and others v Italy (2014), challenged this approach. The ECHR ruled that the most severe administrative sanctions fell within the scope of "criminal matters" within the meaning of the Convention, thus rendering the principle of "criminal liability" applicable to all offences. non bis in idem applicable to the combination of administrative and criminal proceedings and sanctions. For a more detailed analysis of this principle, please see our article on the ne bis in idem principle and its implications for the accumulation of MFA and criminal penalties.

Faced with this development, the French Constitutional Council, in its QPC decisions of March 2015, ruled in favour of prohibiting the accumulation of criminal and administrative penalties for the same acts and the same person. This development was enshrined in the Act of 21 June 2016, which reformed the system for punishing market abuse. For an in-depth analysis of the implications of the the fundamental principle of ne bis in idem and its impact on the accumulation of MFA and criminal penaltiesSee our article on this subject. As a result, a referral mechanism has been put in place: neither the AMF nor the public prosecutor can initiate proceedings without informing the other, in order to determine who is best placed to prosecute. This system is designed to avoid double jeopardy while ensuring effective action against breaches. For a detailed understanding of the stages in the AMF sanction procedure, from investigation to decision, our firm has written a specific article on the detailed stages in the AMF sanction procedure.

The principle of combining criminal and disciplinary sanctions was also accepted, on the grounds of different objectives (general public order for criminal sanctions, professional discipline for disciplinary sanctions). However, the decisions of the Constitutional Council in 2015 also had an impact in this area, leading to a rewriting of Article L. 621-16 of the Monetary and Financial Code, which means that financial and criminal penalties for the same acts can no longer be combined. These reforms reflect a desire to bring French law into line with European requirements for fair trial guarantees.

The support of an expert lawyer: a major advantage

The complexity and technical nature of the AMF's sanctioning powers, whether administrative or disciplinary, underline the importance of qualified legal support. Finding oneself at the centre of sanction proceedings, whether in the form of a preliminary investigation, a statement of objections or a hearing before the Enforcement Committee, can have significant financial, professional and reputational consequences.

Our firm, with a practice dedicated to banking and financial law, is at your disposal to advise and defend you at every stage. Whether it's understanding the basis of the alleged breaches, preparing your submissions, representing you at hearings or managing appeals, our expertise can make a significant difference. A lawyer who is an expert in banking and financial law will provide you with a tailored defence, guiding you through the nuances of the procedure, the principles of proportionality of sanctions and the implications of the non bis in idem. If you are concerned by an AMF sanction procedure, our team is at your side to analyse your situation and build a relevant defence strategy, including exploring all the options available to you. possible securities and legal guarantees. For a tailored defence, do not hesitate to contact one of our firm's expert lawyers in banking and finance law.

For an in-depth analysis of your situation and tailored advice, contact our team of lawyers.

Sources

• Monetary and Financial Code
• Commercial code
• Code of Criminal Procedure
• Code of administrative justice
• Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (MAR).
• Directive 2014/57/EU of the European Parliament and of the Council of 16 April 2014 on criminal sanctions for market abuse (MAD 2).
• European Convention for the Protection of Human Rights and Fundamental Freedoms (ECHR)
• Protocol No. 7 to the European Convention for the Protection of Human Rights and Fundamental Freedoms
• Financial Security Act No. 2003-706 of 1 August 2003
• Banking and Financial Regulation Act 2010-1249 of 22 October 2010
• Law 2016-819 of 21 June 2016 reforming the system for preventing market abuse
• Law 2016-1691 of 9 December 2016 on transparency, the fight against corruption and the modernisation of economic life (known as the "Sapin II Law").
• Act no. 2019-486 of 22 May 2019 on the growth and transformation of businesses (known as the "PACTE Act")
• General Regulations of the Autorité des marchés financiers (AMF)
• Fasc. 1511: AUTORITÉ DES MARCHÉS FINANCIERS. - Pouvoir de sanction, JurisClasseur Droit bancaire et financier, by Régis Vabres and Samia Maouche, First publication: 27 January 2023.

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