In a judgment of 14 February 2024, the Commercial Chamber held that MAR neither limits the imposition of a sanction on a journalist or news organisation for disseminating false or misleading information to cases in which it is established that the journalist or organisation derived an advantage from that dissemination or acted with the intention of misleading the market, nor makes such a sanction conditional on those circumstances. A sanction may also be imposed where false or misleading information is disseminated for journalistic purposes, without any advantage being obtained or any intention to mislead the market, but the person disseminating it has failed to comply with the rules or codes of the profession
1. On 22 November 2016 at 16:05, a US news agency specialising in the publication of real-time financial information received by email a press release purporting to originate from a French company whose securities were admitted to trading on the Euronext Paris regulated market. The release announced, in particular, that the company was initiating a revision of its consolidated accounts for 2015.
On the same day, between 16:06 and 4 seconds, and 16:07, the agency issued several news reports relaying the contents of that press release.
The price of the security concerned fell almost instantaneously by 18,28 %.
Between 16:14 and 7 seconds and 16:52, the news agency (i) deleted the published reports and (ii) issued reports correcting and denying them.
2. The French Financial Markets Authority (Autorité des marchés financiers, AMF) opened an investigation.
On 11 December 2019, the AMF Enforcement Committee sanctioned the news agency for the breach of disseminating information which it ought to have known was false or misleading and was likely to secure the listed company’s share price at an abnormal or artificial level, and imposed a financial penalty of five million euros (AMF, Enforcement Committee, 11 December 2019, SAN-2019-17, Rev. sociétés 2020. 258, commentary by A.-C. Muller 📄; RSC 2020. 362, commentary by F. Stasiak, J.-M. Brigant and A. Bellezza 📄).
On an appeal by the news agency, the Paris Court of Appeal reduced the penalty to three million euros (Paris, Division 5 – Chamber 7, 16 September 2021, No. 20/03031, RSC 2022. 368, commentary by F. Stasiak †, J.-M. Brigant and A. Bellezza 📄).
The decision under review, delivered by the Commercial Chamber of the Court of Cassation, rules on the news agency’s appeal on points of law.
3. In this decision, the Court of Cassation restates established principles concerning restrictions on press freedom in the interests of protecting financial markets, while making a new contribution concerning sanctions on persons who disseminate information without deriving any advantage or intending to mislead the market. It then addresses the review of the foreseeability and proportionality of a sanction imposed by the AMF on a journalist for market abuse.
A new restriction on press freedom in the interests of protecting financial markets
Restatement of the general principles governing restrictions on press freedom in the interests of
protecting financial markets
4. Articles 12 and 15 of Regulation (EU) No. 596/2014 of 16 April 2014 on market abuse, known as « MAR » (market abuse regulation), prohibit market manipulation. That concept includes the dissemination of information, through any channel, which secures or is likely to secure the price of a financial instrument at an abnormal or artificial level, where the person disseminating the information knew or ought to have known that it was false or misleading.
At the same time, Article 21 of that Regulation protects the dissemination of information for journalistic purposes, which is assessed taking into account the rules governing freedom of the press and freedom of expression, and the rules or codes governing the journalistic profession, unless the person concerned has a) derived a benefit from the dissemination or b) acted intentionally to mislead the market.
5. The Court of Justice of the European Union has already clarified the relationship between these provisions (CJEU, 15 March 2022, Case C-302/20, Dalloz actualité, 1 April 2022, commentary by C. Méléard and G. de Foucher ; D. 2022. 1134 📄, case note by G. Parleani 📄; Rev. sociétés 2022. 447, commentary by A.-C. Muller 📄; Légipresse 2022. 214 and accompanying commentary 📄; ibid. 310, article by A. Tandeau 📄; RSC 2022. 373, commentary by F. Stasiak †, J.-M. Brigant and A. Bellezza 📄; RTD com. 2022. 122, commentary by N. Rontchevsky 📄), explaining that the determination of whether a disclosure is lawful must be based on Article 10, while taking into account the clarifications in Article 21. Accordingly, to qualify for the exemption, a disclosure must not only serve journalistic purposes but also be:
- necessary for the exercise of the journalistic profession;
- proportionate: in this respect, the Court of Justice recalled that the disclosure of inside information harmed not only the private interests of certain investors but also, more generally, the public interest in ensuring full and proper market transparency, in order to protect market integrity and ensure the confidence of all investors.
6. The decision under review specifically revisits the balance between the public interest in protecting the integrity of financial markets, on the one hand, and freedom of the press and freedom of expression, on the other.
More specifically, the Court of Cassation interprets the requirement for assessment « taking into account the rules governing the freedom of the press and freedom of expression in other media and the rules or codes governing the journalist profession » contained in Article 21, cited above. The Paris Court of Appeal had held that there was no need to refer the questions proposed by the news agency to the Court of Justice of the European Union for a preliminary ruling, as there was no doubt as to the interpretation.
The underlying issue, in our view, is how the concept of what the person disseminating information « ought to have known » (MAR, Art. 12) applies to a journalist.
The new possibility of sanctioning a person who derived no advantage and had no intention of misleading the market, but failed to comply with the rules of the profession
7. The Commercial Chamber of the Court of Cassation upheld the appellate judgment insofar as it construed Article 21 of MAR as neither limiting the imposition of a sanction on a journalist or news organisation for disseminating false or misleading information to cases in which it is established that the journalist or organisation derived an advantage from that dissemination or acted with the intention of misleading the market, nor making such a sanction conditional on those circumstances.
The Court confirmed that a journalist who neither intended to mislead the market nor derived an advantage from the dissemination may nevertheless be sanctioned for market manipulation under Article 12 of MAR, provided that the journalist failed to comply with the rules or codes of the profession.
In their judgment, and more explicitly in the press release published on the same day, the judges identified three alternative situations where a journalist disseminates false or misleading information concerning an issuer:
- situation No. 1: the journalist derived no advantage from the dissemination and had no intention of misleading the market, and complied with the rules of the profession;
- situation No. 2: the journalist derived no advantage from the dissemination and had no intention of misleading the market, but failed to comply with the rules of the profession;
- situation No. 3: the journalist intended to mislead the market or sought to derive a benefit from the dissemination.
The Commercial Chamber now states very clearly, and this is the principal contribution of the decision under review, that only the journalist falling within situation No. 1 is exempt from all liability.
8. As regards the application to the present case, which falls within situation No. 2, the Court of Cassation endorsed the appellate judges’ analysis, which held the news agency liable on the basis, in particular, of the following factual findings:
- as to its form, the disputed press release contained manifestly unusual or atypical wording and was not written in the language normally used by the issuer;
- as to its substance, the events described in the release were highly improbable in view of the issuer’s financial health, as evidenced by a press release issued less than a month earlier.
These factors ought to have alerted the journalists, prompted them to question the authenticity of the information and to undertake checks before the disputed dissemination, so as to rely on a sufficiently accurate and reliable factual basis, proportionate to the nature and strength of their allegations.
This duty of verification arose both from the rules and codes of the profession and from the internal procedures of the news agency concerned.
In this case, however:
- only one minute and four seconds had elapsed between receipt of the release and dissemination of the first report, which did not allow sufficient checks to be carried out;
- the journalists acknowledged during the investigation that they had conducted only very superficial checks, without reading the document in full;
- only after third parties alerted them, following dissemination of the information, did they take steps to verify its authenticity;
- basic checks (in particular, consulting the issuer’s official website directly or examining the domain name mentioned in the disputed release) would have revealed that the release was a forgery.
In a judgment upheld by the Court of Cassation, the Court of Appeal concluded that the journalists had failed to fulfil their duties and responsibilities by omitting the prior checks required to enable them to rely on a sufficiently accurate and reliable factual basis, proportionate to the nature and strength of their allegations.
The breach was therefore established.
Review of the foreseeability and proportionality of the sanction imposed by the AMF on a journalist for market abuse
9. In relation to situation No. 2, considered in the judgment under review, the Commercial Chamber takes a further step in reconciling the stated objectives of protecting the integrity of financial markets and safeguarding freedom of the press and freedom of expression.
A journalist who has not derived an advantage from the dissemination, or sought to mislead the market, may be sanctioned only if the rules concerning freedom of the press and freedom of expression permit it, and the sanction is necessary and proportionate to the legitimate aims pursued.
It should be recalled that these cumulative conditions do not apply to situation No. 3 (intent to disseminate false or misleading information, or an advantage obtained).
Foreseeability of the sanction in light of the rules concerning freedom of the press and freedom of expression
10. In concluding that the rules concerning freedom of the press and freedom of expression permit a sanction in the present circumstances, the decision under review recalls that:
- according to recital 77 of MAR, where the Regulation refers to rules governing freedom of the press and freedom of expression in other media, and to the rules or codes governing the journalistic profession, those freedoms should be taken into account as guaranteed within the Union and the Member States and as recognised under Article 11 of the Charter of Fundamental Rights of the European Union and other relevant provisions;
- Article 11 of the Charter must, in turn, be interpreted in light of the case law of the European Court of Human Rights concerning Article 10 of the European Convention (CJEU, 15 March 2022, Case C-302/20, cited above).
The case law of the European Court of Human Rights, cited by the Commercial Chamber, establishes in particular that:
- A law may satisfy the requirement of foreseeability even if the person concerned must obtain appropriate advice to assess, to a degree reasonable in the circumstances, the consequences that a particular act may entail. This is especially true of professionals, who are accustomed to exercising considerable caution in their occupation and may therefore be expected to take particular care in assessing the risks it entails (ECtHR, 15 November 1996, Cantoni v. France, No. 17862/91, § 35; Cantoni v. France, D. 1997. 202 📄, commentary by C. Henry 📄; RSC 1997. 462, commentary by R. Koering-Joulin 📄; ibid . 646, commentary by J.-P. Delmas Saint-Hilaire 📄; 20 October 2015, Vasiliauskas v. Lithuania, No. 35343/05, § 157);
- The protection afforded to journalists by Article 10 of the European Convention is subject to the condition that they act in good faith, on the basis of accurate facts, and provide reliable and precise information in accordance with journalistic ethics (ECtHR, 25 September 2002, Colombani v. France, No. 51279/99, § 65; 14 May 2008, July and Sarl Libération v. France, No. 20893/03, § 63; 21 April 2016, De Carolis and France Télévision v. France, No. 19313/10, §§ 44 and 45; 12 July 2016, Reichman v. France, No. 50147/11, § 54, Dalloz actualité, 20 July 2016, commentary by A. Portmann ; D. 2016. 1652 📄) ;
- the journalist’s duty to ensure the existence of a sufficiently accurate and reliable factual basis, proportionate to the nature and strength of the allegation, derives from the rules of the journalistic profession and the standards of responsible journalism (ECtHR, 10 November 2015, Couderc and Hachette Filipacchi v. France, No. 40454/07, § 44, Dalloz actualité, 27 November 2015, commentary by J. Gaté ; Couderc and Hachette Filipacchi Associés v. France, AJDA 2016. 143, article by L. Burgorgue-Larsen 📄; D. 2016. 116, and accompanying commentary 📄, case note by J.-F. Renucci 📄; Constitutions 2016. 476, article by D. de Bellescize; RTD civ. 2016. 81, commentary by J. Hauser; ibid. 297, commentary by J.-P. Marguénaud ).
11. Among the relevant instruments, the European case law, again cited in the judgment under review, refers to:
- the Declaration of the Duties and Rights of Journalists, adopted in Munich on 24 and 25 November 1971 by professional journalists’ organisations from the Member States of the European Community and endorsed by the International Federation of Journalists at its Istanbul Congress in 1972, which provides that journalists’ essential duties in researching, reporting and commenting on events include publishing only information whose source is known, or, where necessary, accompanying it with appropriate reservations;
- the Charter of Professional Ethics for Journalists, published by the National Union of Journalists in 1918 and updated in 1938 and 2011, which provides that urgency in disseminating information or exclusivity must not take precedence over thorough investigation and verification of sources; that a journalist « worthy of the name » regards, in particular, failure to verify facts as one of « the most serious professional failings »; and that journalists must exercise the utmost vigilance before disseminating information, whatever its source;
- the Global Charter of Ethics for Journalists, adopted by the International Federation of Journalists on 12 June 2019, which supplements the code of principles on the conduct of journalists adopted in 1954, known as the « Bordeaux Declaration », and states that journalists must report only facts whose source they know, and that urgency or immediacy in disseminating information does not take precedence over verification of sources.
It follows that an informed journalist is fully able, on the basis of the wording of Article 21 of MAR, to assess to a reasonable degree the risks incurred by disseminating false or misleading information, if necessary with advice from specialist lawyers, and that this provision therefore does not infringe the principle of legality of offences and penalties.
Proportionality of the sanction in light of the legitimate aims pursued
12. As regards the proportionality of the financial penalty provided for by Article L. 621-1 of the Monetary and Financial Code, with a maximum amount of one hundred million euros.
The Court of Cassation explains that this high amount, considered in the abstract independently of the facts of the case, does not in itself constitute an interference with freedom of expression that is unnecessary in a democratic society, for two reasons:
- it pursues a legitimate aim, since it seeks to safeguard the public policy objective of protecting the integrity of financial markets and investors and combating market abuse. In view of the potentially very substantial financial consequences of disseminating false or misleading information, this requires the penalty to be sufficiently deterrent to fulfil the preventive function assigned to punishment (Constitutional Council, 2 June 2017, No. 2017-634 QPC, D. 2017. 1189 📄; Rev. sociétés 2018. 261, case note by J.-H. Robert; Constitutions 2017. 344, Decision 📄; RSC 2017. 540, commentary by J.-M. Brigant 📄) ;
- it is proportionate to the aim pursued, since Article 21 of MAR establishes a specific protective regime for journalists, under which the lawfulness or unlawfulness of disseminating false or misleading information is determined by taking into account the rules concerning freedom of the press and freedom of expression, and the rules or codes governing their profession. That regime is excluded only where the information concerned was disseminated for the purpose of obtaining, or enabling others to obtain, an advantage or profits, or with the intention of misleading the market (situation No. 3). Accordingly, a balance has been struck between, on the one hand, the public policy objective of protecting financial markets and investors and combating market abuse, and, on the other, freedom of the press and freedom of expression.
13. As regards the application of proportionality to the facts of the case, which the Court of Cassation agreed to review, the appellate judges relied on the following factors in determining the amount of the sanction:
- as aggravating factors, (i) the absence of checks before publication, despite the importance of the information concerned, and (ii) the status of the person disseminating it (the news agency’s considerable influence and reputation meant that financial markets paid close attention to the information it disseminated);
- as a mitigating factor, the prompt response of the person disseminating the information, who stopped and then removed the dissemination and promptly published corrections and denials, as early as 16 hours 14 minutes and 7 seconds. According to case law, this response, like active repentance in criminal law, does not diminish the seriousness of the breach, but helped the issuer’s share price recover and remedy the disruption caused by the breach. This response had not been taken into account by the AMF Enforcement Committee, but was taken into account by the appellate judges, leading them to reduce the penalty (see above).
Beyond the statutory maximum financial penalty, the Court of Cassation therefore also upheld the proportionality of the amount imposed by the courts ruling on the merits in this case.
14. Surprisingly, the Commercial Chamber added that journalistic information concerning the financial position of listed companies and intended for investors does not have the same importance in a democratic society as journalistic information concerning matters of general or historical interest or attracting considerable media interest. Consequently, in financial matters, where journalistic activity is directed towards investors, press freedom may be subject to greater restrictions to ensure the integrity and transparency of financial markets and the protection of those investors.
This final clarification did not appear necessary, since the Court of Cassation had already endorsed the analysis in the appellate judgment. In any event, we find it surprising: whereas the CJEU’s approach seeks, in particular, to prevent a potential chilling effect (CJEU, 15 March 2022, Case C-302/20, cited above), which the courts ruling on the merits now take into account (see the case in which the CJEU ruled, Paris, 30 March 2023, No. 18/28497, Rev. sociétés 2023. 638, commentary by J. Prorok 📄), this position of the Court of Cassation appears counterproductive and risks affecting journalistic activity disproportionately.
Since the Court of Cassation neither mentioned nor substantiated this point in its press release, further clarification would be welcome.
The examination of the appeal on points of law against the above-mentioned judgment of 30 March 2023 may provide an opportunity for such clarification.
by Ghislain de Foucher and Chloé Méléard, Members of the Paris Bar