Insider Trading in Poland: Criminal Liability and KNF

Insider trading in Poland means using inside information to acquire or dispose of financial instruments, directly or indirectly, for one’s own account or for a third party, or to cancel or amend an order placed before possessing that information, where that information is precise, non-public, directly or indirectly related to an issuer or financial instrument, and would likely have a significant effect on the price if made public [1].

The core rules come from the EU Market Abuse Regulation, known as MAR, which applies directly in Poland. Polish criminal sanctions are set out mainly in the Act on Trading in Financial Instruments of 29 July 2005. In practice, an insider trading Poland case may involve listed shares, bonds, derivatives, emission allowances, or other instruments admitted to trading on regulated markets, multilateral trading facilities, or organised trading facilities, instruments for which admission to such trading has been requested, or related instruments whose price or value depends on them.

For companies, the issue is not limited to the person who placed the order. A KNF investigation may affect management board members, supervisory board members, investor relations teams, finance departments, advisers, brokers, auditors, and transaction teams. The consequences include criminal exposure, administrative penalties, trading suspensions, disclosure disputes, reputational damage, and loss of investor confidence.

Inside information under MAR

Inside information is defined in Article 7 MAR. The definition has four practical elements:

• Precision – the information indicates circumstances that exist or may reasonably be expected to exist, or an event that has occurred or may reasonably be expected to occur.

• Non-public character – the information has not been made public through proper disclosure channels.

• Connection with an issuer or instrument – the information concerns, directly or indirectly, an issuer or financial instruments.

• Price sensitivity – if made public, the information would likely have a significant effect on prices.

Examples may include unpublished financial results, planned mergers and acquisitions, major financing decisions, loss of a key contract, restructuring, insolvency risks, regulatory decisions, significant litigation, or cyber incidents. Whether a specific fact is inside information depends on the circumstances, including the issuer’s size, market expectations, timing, probability, and potential price impact.

Criminal liability for insider trading in Poland

Article 14(a) MAR prohibits engaging or attempting to engage in insider dealing [1]. In Poland, breach of this prohibition may constitute a criminal offence under Article 180 of the Act on Trading in Financial Instruments. The sanction is a fine of up to PLN 5,000,000, imprisonment from 3 months to 5 years, or both [2].

Criminal liability may arise where a person possesses inside information and uses it by:

• acquiring financial instruments,

• disposing of financial instruments,

• cancelling a previously placed order,

• amending a previously placed order.

The prosecution must assess facts, timing, knowledge, intent, and the link between the information and the transaction. A profitable trade is not required in every case, but the transaction history, access to documents, internal communications, and unusual trading patterns may be important evidence.

Unlawful disclosure of inside information is a separate risk. Article 14(c) MAR prohibits unlawful disclosure, and Polish law provides criminal sanctions for this conduct in Article 181 of the Act on Trading in Financial Instruments [1], [2]. This may concern informal conversations, private messages, calls with investors, leaks to journalists, or communication with business partners without a legal basis and proper safeguards.

Three exceptions and legitimate behaviour under MAR

MAR recognises that not every transaction by a person with inside information is automatically unlawful. The assessment is fact-sensitive. The following three exceptions are particularly relevant in business practice:

1. Transactions carried out to discharge an obligation that has become due, where that obligation results from an order placed or an agreement concluded before the person possessed inside information, or to satisfy a legal or regulatory obligation that arose before the person possessed inside information, provided that the transaction is carried out in good faith and not to circumvent the prohibition.

2. A legal person is not treated as having used inside information solely because a natural person within that legal person possessed inside information, provided that effective internal arrangements ensured that the natural person did not influence the decision to trade.

3. Acting as a market maker or as a person authorised to act as a counterparty, where the acquisition or disposal of financial instruments is made legitimately in the normal course of market making or counterparty activity.

These rules should not be treated as automatic safe harbours. Documentation, decision-making separation, trading policies, wall-crossing procedures, and evidence of good faith are usually decisive. If internal arrangements exist only on paper, they may not protect the organisation or individuals involved.

KNF investigation and regulatory consequences

The Polish Financial Supervision Authority, known as KNF, supervises compliance with market abuse rules. A KNF investigation may include requests for documents, transaction data, telephone recordings or records, e-mails, internal reports, issuer disclosures, suspicious transaction and order reports, and explanations from market participants.

KNF may analyse whether the issuer properly identified inside information, whether disclosure was delayed lawfully under Article 17 MAR, whether insider lists were kept under Article 18 MAR, and whether persons discharging managerial responsibilities complied with notification obligations under Article 19 MAR [1].

If KNF identifies conduct that may constitute a crime, the case may be referred to law enforcement authorities. From that point, the matter can proceed in parallel: regulatory proceedings before KNF and criminal proceedings conducted by the prosecutor, with possible involvement of the police or other investigative bodies. This creates a need for consistent communication, evidence preservation, and careful handling of interviews and document production.

Insider trading, market manipulation, and securities fraud

Insider trading should be distinguished from market manipulation. Market manipulation concerns conduct such as sending misleading signals about supply, demand, or price, securing prices at artificial levels, using fictitious devices, disseminating false information, or manipulating benchmarks. Article 15 MAR prohibits market manipulation, while Polish criminal liability is regulated separately, including Article 183 of the Act on Trading in Financial Instruments [1], [2].

The term securities fraud is broader and not a single statutory label in Polish criminal law. Depending on the facts, it may refer to insider dealing, market manipulation, misleading disclosures, investment scams, fraud under the Polish Criminal Code, or offences connected with public offerings. Correct legal classification matters because sanctions, limitation periods, evidence standards, and defence strategy may differ.

Business risk management and compliance

Companies exposed to capital markets should treat insider trading risk as a compliance and governance issue, not only as a criminal law problem. Practical controls include:

• clear identification of inside information and escalation rules,

• promptly updated insider lists,

• closed periods and trading approval procedures,

• documented decisions on delayed disclosure,

• Chinese walls in transaction projects,

• training for management, finance, investor relations, and M&A teams,

• evidence preservation rules for a possible KNF investigation.

Kopeć & Zaborowski (KKZ) advises companies, managers, and individuals in matters involving insider trading and disclosure of inside information, including criminal defence, regulatory proceedings, internal investigations, and crisis management. Early assessment helps separate facts from assumptions and reduce procedural, financial, and reputational risk.

When to seek legal assessment

Legal assessment is usually needed when a trade took place shortly before a price-sensitive announcement, when KNF requests information, when an issuer considers delayed disclosure, when a leak is suspected, or when employees had access to confidential transaction documents. The same applies if journalists, investors, or counterparties raise questions about unusual market activity.

This is informational material, not legal advice. The legal classification of conduct depends on the facts, the instruments involved, the person’s knowledge, timing, internal procedures, and available evidence.

If a KNF investigation or criminal proceedings concerning insider trading, market abuse, or financial crime may arise, it is advisable to contact a lawyer to obtain an assessment of the situation and discuss possible steps. Early consultation can help secure documents, organise communications, and avoid decisions that increase procedural risk.

FAQ – Insider Trading in Poland: Criminal Liability and KNF

What is insider trading in Poland?

Insider trading in Poland is the use of inside information to trade, attempt to trade, cancel a previously placed order, or amend a previously placed order in financial instruments. The main prohibition is in Article 14(a) MAR, with criminal sanctions under Article 180 of the Act on Trading in Financial Instruments.

What penalties apply for insider trading in Poland?

Under Article 180 of the Act on Trading in Financial Instruments, insider dealing may be punishable by a fine of up to PLN 5,000,000, imprisonment from 3 months to 5 years, or both.

Does KNF conduct criminal proceedings?

No. KNF is the market supervisor and may conduct regulatory activities and administrative proceedings. If facts indicate a criminal offence, the matter may be referred to law enforcement authorities for criminal proceedings.

Is sharing inside information with another person a crime?

It may be. Article 14(c) MAR prohibits unlawful disclosure of inside information. Polish criminal sanctions for unlawful disclosure are provided in Article 181 of the Act on Trading in Financial Instruments, subject to the facts and legal basis for disclosure.

How is insider trading different from market manipulation?

Insider trading concerns using non-public price-sensitive information. Market manipulation concerns misleading signals, artificial prices, false information, or other manipulative conduct affecting the market. Both are regulated by MAR but may involve different Polish criminal provisions.

Can a company be exposed if only one employee traded?

Yes, depending on the facts. KNF and prosecutors may examine access controls, internal procedures, communications, approvals, and whether the employee’s knowledge influenced company decisions or trading activity.

What should a company do after receiving a KNF request?

The company should secure documents, preserve communications, identify relevant persons, review disclosure decisions, and obtain legal assessment before submitting explanations. Inconsistent or incomplete responses may increase regulatory and criminal risk.

Bibliography

1. Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse, OJ L 173, 12.6.2014.

2. Act of 29 July 2005 on Trading in Financial Instruments, Journal of Laws of the Republic of Poland, consolidated text, as amended.

3. Act of 29 July 2005 on Capital Market Supervision, Journal of Laws of the Republic of Poland, consolidated text, as amended.

4. European Securities and Markets Authority, Questions and Answers on the Market Abuse Regulation, ESMA70-145-111.

5. Polish Financial Supervision Authority (KNF), official information and guidance on market abuse and MAR reporting obligations.