The Helsinki Stock Exchange witnessed a
whirlwind of action last year as many listed companies warned of weaker results
and stock prices zigzagged violently. The eventful year seems to have brought
some side effects as well.

One hundred cases of suspected market abuse
came before the Financial Supervisory Authority last year, significantly more
than in any previous year.

“We have had significantly more reports of
suspicious transactions – from both the exchange and the brokers,” says Sari
Helminen, The Financial Supervisory Authority’s Office Manager.

Suspicions include such things as market manipulation,
failure to disclose information, and the misuse of insider information, with
most cases involving insider information misuse in some way.  

“The situation has been that, the more
active the market, the more there has been a suspicion that insider information
is being misused. Last year, there were many profit warnings, corporate restructurings
and listing removals,” says Helminen. The Financial Supervisory Authority will
not mention which companies’ share activities are under suspicion.

Misuse of inside information on the rise

Inside information about the upcoming
events and decisions of listed companies can assist people to time their share
trading to maximum benefit, giving them an unfair advantage over others, e.g. small-scale
investors, who must rely on market data that is readily available.

The fraud suspicions raise concerns at the
Shareholders’ Confederation.

“It is quite worrying when you consider the
reliability and credibility of the stock market and the marketplace. These
kinds of suspicions weaken that,” says Shareholders’ Confederation CEO Antti
Lahtinen.

Attempts have been made to eradicate misuse
of insider information with tighter regulation and control at several junctures,
and yet the number of fraud suspicion cases in Finland continues to grow.

“It is a shocking situation. Inside trading
has been regulated for a very long time. You would think that the market
players would gradually learn and understand the rules, so suspicions like this
could never occur,” says Lahtinen.

Just this week, the EU Parliament decided
to once again tighten up and harmonize its statutes on abuses in the financial markets.

In Finland, only a few of the fraud suspicions
have led to sanctions. Last year, the Financial Supervisory Authority turned
four investigation requests over to the police, issued two public warnings and imposed
six misdemeanour fines.