Insider trading and disclosure of inside information in Poland

About

Insider trading is the purchase or sale of a financial instrument by a person with access to insider information that may affect the valuation of the instrument in the market. It involves the use of inside information in making transactions in financial market instruments. Information in the case of this crime becomes its main tool – the reason for making a purchase or sale of the asset to which the information relates. Information is a commodity that affects the investment decision, and therefore the valuation of financial instruments.

The use and disclosure of insider information has for years been considered one of the most dangerous behaviors of the capital market, as it can distort the quotation of the entity to which it relates, sometimes also affecting the entire market or industry. Insider trading is an extremely harmful phenomenon, as it can affect large fluctuations in quotations, which in turn demonstrates the unpredictability of the market, and therefore its unattractiveness to larger, often foreign investors.

In Poland, insider trading abuses on the Warsaw Stock Exchange are so common that the exchange itself has earned the nickname “banana”. Calling the Warsaw Stock Exchange a banana exchange has to do with the fact that changes occurring on it are more often unpredictable than on foreign exchanges. The capital market, of which the financial market is a part, is supervised by the Polish Financial Supervision Authority. The purpose of supervision is to ensure the proper functioning of this market, stability, security and transparency, as well as to ensure the protection of the interests of participants from insider trading crimes.

The crime of so-called insider trading is defined by the Financial Instruments Trading Act, defining it in Article 181 of the Act as unauthorized use of inside information concerning financial instruments. The Polish law refers directly to the Regulation of the European Parliament and of the Council (EU) No. 596/2014 on market abuse (the so-called MAR Regulation) and provides for the use of insider information, a fine of up to PLN 5,000,000 (EUR 1,250,000) or imprisonment from 3 months to 5 years (or both penalties combined). The offense of disclosure of inside information is defined by Article 180 of the above Act, providing for a fine of up to PLN 2,000,000 (EUR 500,000)  or imprisonment for up to 4 years (or both penalties combined).

We offer the following services:

  • analysis of the client’s needs – development of appropriate documents and procedures to reduce the risk of disclosure of confidential information in the organization;
  • conducting audits aimed at identifying the cause of interest of criminal investigation authorities and implementing the optimal course of action, including planning a defense strategy in case of suspected crime (so-called criminal compliance);
  • conducting training on preventing insider trading and disclosure of confidential information;
  • advising on investigations by the Polish Financial Supervision Authority carried out under the Law on Financial Market Supervision;
  • execution of defense against charges of insider trading and disclosure of confidential information; representation and assistance in crisis situations (searches, interrogations, arrests, presentation of charges, detention on remand).

Our offer is addressed to:

  • entities of interest to the Polish Financial Supervision Authority;
  • companies exposed to insider trading;
  • companies seeking comprehensive support in the field of criminal compliance;
  • individuals suspected and accused of insider trading or disclosure of confidential information;
  • executives of commercial companies.
Read more

Insider trading

Illegal insider trading refers generally to buying or selling a security, in breach of a fiduciary duty or other relationship of trust and confidence, on the basis of material, nonpublic information about the security. Insider trading violations may also include “tipping” such information, securities trading by the person “tipped,” and securities trading by those who misappropriate such information.

Insider information

Definition of insider information: it refers to non-public facts and information about the company which is publicly-traded. This information may provide an advantage to investors. The manipulation of insider information to benefit an investor in buying or selling stock is known as insider trading and is illegal.

Examples of Insider Trading

  1. A Lawyer Acting on Confidential Information
    A lawyer representing the CEO of a company learns in confidence that the company is about to experience a substantial revenue decline. The lawyer reacts by selling off their shares in the company the next day, knowing the stock price will drop when the company releases its quarterly earnings.
  2. A Financial Analyst with Insider Knowledge
    A financial analyst working on a merger deal gains confidential knowledge that Company A is planning to acquire Company B at a significant premium to its current stock price. Before this information is made public, the analyst purchases a large number of shares in Company B, anticipating a sharp rise in stock value once the acquisition is announced.
  3. An Executive’s Spouse Acting on a Tip
    A senior executive at a pharmaceutical company privately informs their spouse that the company’s new drug has failed critical safety tests, and the announcement is scheduled for release in a week. Acting on this tip, the spouse sells all their shares in the company to avoid significant losses when the news causes the stock price to plummet.

Protect Your Business from Insider Trading Risks

Insider trading and the disclosure of confidential information are crimes that can severely damage an organization’s reputation and financial stability. Our law firm offers comprehensive support to prevent such threats, respond effectively in crisis situations, and defend our clients’ interests at every stage of legal proceedings. With extensive experience in legal consulting and compliance audits, we help companies implement robust mechanisms to safeguard against abuses.

Our team of specialized lawyers provides expert advice to entities exposed to insider trading risks, supports individuals under suspicion or accusation, and represents clients in dealings with supervisory authorities such as the Polish Financial Supervision Authority (KNF). We also deliver training programs to raise awareness and implement practical solutions that minimize the risk of violations.

Don’t let insider trading jeopardize your company’s security. Contact us today and ensure your interests are protected by the leading experts in the field!

Any questions?

Maciej Zaborowski

Advocate, Managing Partner

+48 509 211 000

How can
we help you?

Contact
the experts
Maciej Zaborowski

Maciej Zaborowski

Advocate, Managing Partner

Paweł Gołębiewski

Paweł Gołębiewski

Attorney-at-law, Head of International Criminal Law Practice

FAQ

What is insider trading under Polish law?

Insider trading involves buying or selling financial instruments by a person who has access to confidential inside information that can significantly affect the price or value of those instruments in the market. Using such inside information, which is not publicly available, for personal gain or to benefit others is illegal. Insider trading distorts the fairness and transparency of financial markets and undermines investor confidence.

How is insider trading regulated in Poland?

Insider trading is regulated primarily under the Financial Instruments Trading Act, which incorporates standards from the European Parliament Regulation No. 596/2014 (MAR Regulation). The law prohibits unauthorized use or disclosure of inside information concerning financial instruments and sets out criminal sanctions for violations, including fines and imprisonment.

What constitutes the disclosure of inside information?

Disclosure of inside information occurs when a person unlawfully shares non-public, material information about financial instruments that could influence investors’ decisions or market prices. Such disclosure can be intentional or accidental and is also a punishable offense under Polish law.

What penalties apply for insider trading and illicit disclosure of inside information?

Penalties under Polish law include:

  • Fines up to PLN 5,000,000 (approximately EUR 1,250,000) for insider trading offenses.
  • Imprisonment from 3 months to 5 years, or both fine and imprisonment.
  • For unlawful disclosure of inside information, fines can reach up to PLN 2,000,000 (approximately EUR 500,000) or imprisonment up to 4 years, or both.

    Sentences may vary depending on the severity and circumstances of the offense.

Who is typically subject to insider trading regulations?

This includes individuals who:

  • Have access to confidential inside information through their position, such as executives or employees of companies issuing financial instruments.
  • Are involved in preparing or disseminating prospectuses or auditing financial statements.
  • Are representatives of entities placing financial instruments on the market.
  • Have affiliation with dominant shareholders or controlling entities within a company.

What are the risks and consequences of insider trading for companies?

Companies implicated in insider trading face:

  • Investigations by regulatory authorities, including the Polish Financial Supervision Authority.
  • Reputational damage and loss of investor trust.
  • Legal liabilities, financial penalties, and possible criminal prosecutions of executives or staff.
  • Increased scrutiny and compliance requirements.

How can companies prevent insider trading and unauthorized disclosure of inside information?

Effective prevention includes:

  • Developing and implementing robust internal policies and procedures to safeguard confidential information.
  • Conducting regular criminal compliance audits to identify vulnerabilities.
  • Training employees and management on the legal obligations and risks related to inside information.
  • Establishing protocols for approval, oversight, and control of sensitive information handling.
  • Implementing whistleblower protections and secure reporting mechanisms.

What kind of legal support is available for individuals or companies involved in insider trading investigations?

Legal experts offer:

  • Advice on complying with market abuse regulations and criminal laws.
  • Representation during investigations and proceedings by the Polish Financial Supervision Authority.
  • Defense against accusations of insider trading or unlawful information disclosure.
  • Crisis management support during searches, interrogations, arrests, and related enforcement actions.
  • Strategic guidance on mitigating legal risks and managing reputational impact.

What role does the Polish Financial Supervision Authority play regarding insider trading?

The Authority supervises the financial market to ensure its integrity, security, and transparency. It monitors suspicious trading activities, conducts investigations into potential market abuse, including insider trading, and enforces legal compliance by issuing fines and referring cases for criminal prosecution when necessary.

Who should seek expert advice regarding insider trading and disclosure risks in Poland?

  • Entities subject to regulatory scrutiny by the Polish Financial Supervision Authority.
  • Companies exposed to high risks due to market activity or complex financial dealings.
  • Individuals suspected or accused of insider trading or improper disclosure.
  • Executives and staff of commercial companies needing compliance support or defense counsel.
  • Investors and stakeholders wanting to understand their rights and protections.