Misleading Impression Definition

MAR 1.5.8 E, MAR 1.5.15 E, MAR 1.5.18 E and MAR 1.5.21 E each contain descriptions of conduct that constitutes market abuse because such conduct creates or is likely to create a false or misleading impression. The exact nature of the behaviour that could create a false or misleading impression varies depending on the characteristics of the market. Examples of behaviours that can give the normal user the false or misleading impression include: If a person is an organization, that person may know information that is not known to everyone in the organization. If a person within the Organization disseminates information that he or she could reasonably expect to be false or misleading, if he or she had knowledge of information held by other persons within the Organization, it is understood that that person did not know or ought reasonably to expect that the information disseminated would be false or misleading, if: the person knows or can reasonably expect that the information disclosed will be false or misleading; and A report or disclosure alone does not create a false or misleading impression if: For the purposes of section 89(1) of the FSA 2012, the term “reckless” should not be limited to situations where the person does not think about the inaccuracy of the statement or “turns a blind eye” if they are aware of the probable inaccuracy of the statement. The test is assessed objectively and could therefore include situations where the person would have known that the statement was misleading if he or she had done everything that the person disseminating the information did not know, or reasonably should have known, which should have led him or her to conclude that it was false or misleading. a transaction or set of transactions intended to conceal ownership of a qualifying investment or relevant product such that disclosure requirements are circumvented by holding the qualifying investment on behalf of a conflicting party, such that disclosure is misleading as to the actual underlying ownership of the security. These transactions are often structured in such a way that the market risk remains with the seller. This does not include nominee participations; Section 3(2) of the Trade Descriptions Act 1968 (TDA 1968) provides that a trade name which, although not false, is misleading because it is likely to be regarded as indicative of the circumstances referred to in the TDA 1968(2) and would be manifestly incorrect as such, is to be regarded as a false trade name. The FSA recognizes the importance of information disseminated through recognized channels for the dissemination of information. Users of such information should be able to rely on the accuracy and integrity of the information transmitted through those channels.

Persons disseminating information about them, such as the company itself, its financial advisers or its public relations advisers, should therefore exercise due diligence to ensure that the information is not inaccurate or misleading. Where this is not the case and the information is likely to give a false or misleading impression, it shall be deemed to have engaged in conduct constituting market abuse. The conduct must be such as to give a false or misleading impression to the regular user. Conduct constitutes market abuse if it is likely to create or give the impression of a price, value or volume of transactions that is materially false or misleading; and A transaction is properly executed if it is executed in a manner that takes into account the need for the market as a whole to operate fairly and efficiently. The manner in which a transaction was executed would probably not be considered appropriate by the regular user if a transaction was executed in a particular manner for the purpose of creating a false or misleading impression. In most cases, prescribed procurement rules require that transactions be properly executed (e.g., rules for reporting and executing cross-trades). Transactions would not necessarily be considered poorly executed simply because the manner in which they were executed does not disclose the company`s intentions or positions to the market. Here is an example of spreading false or misleading information. A person posts information on an Internet bulletin board or chat room that contains false or misleading statements about the acquisition of a corporation whose shares are eligible investments. The person knows that the information is false or misleading, and has published the information to create a false or misleading impression.

The following behaviour does not create a false or misleading impression even if the conditions described in MAR 1.5.8E(1), MAR 1.5.8E(2) and MAR 1.5.8E(3) are met, provided that the conditions set out in MAR 1.5.8E(4) and MAR 1.5.8E(5) are also met: A factor to be taken into account in determining the purpose of the person concerned is whether that person has an interest in a qualifying investment or a relevant product (see MAR 1.5.13 E), for which the information is relevant. This factor, if any, will indicate that the person disseminated the information to create a false or misleading impression. However, the absence of such an interest does not conclusively demonstrate that the conduct does not constitute market abuse. Examples of behaviours that may create a false or misleading impression and for which the primary justification may not be legitimate commercial justification include: making a statement that they know to be materially false or misleading; or the person disseminates the information to create a false or misleading impression (this must not be the sole purpose of disseminating the information, but must be a driving objective). the transaction(s) has the primary effect of inflating, maintaining or squeezing the apparent supply or demand, or the apparent price or value, of a qualifying investment or relevant product, so that the regular user is likely to appear false or misleading; and making false or misleading statements or creating a false or misleading impression with respect to certain benchmarks Paragraph 118(2)(b) of the Act defines conduct that creates a false or misleading impression as follows: “conduct that is likely to create a false or misleading impression on a regular market user as to the supply or demand or price or value of investments of this type.”