An accusation of insider trading can stem from a seemingly ordinary transaction: buying shares before an announcement, selling after a confidential meeting, modifying an order, or having a conversation with an acquaintance who then trades on the market. If you are facing an allegation in Milan, your practical doubts are often the same: was the information truly inside information? Did the transaction depend on that news? A market rumor, personal analysis, or a pre-planned decision can change the picture.
In this guide, I want to clarify which elements turn confidential news into inside information, which conducts may be considered abuse, and why a CONSOB proceeding does not automatically coincide with a criminal trial. We will also look at the value of order flows, communications, and timelines: important data to be read in context rather than treated as a pre-written answer.
When news becomes inside information
It is not enough for news to be confidential. Under the European regulation on market abuse, inside information must be of a precise nature, not public, relating directly or indirectly to one or more issuers or financial instruments, and which, if it were made public, would be likely to have a significant effect on the prices. Therefore, the point is not the mere confidential nature of a conversation, but its concrete ability to influence investors' decisions. The definition is contained in Regulation (EU) No 596/2014 on market abuse, specifically in Article 7.
A project does not need to be finalized already. A merger not yet signed, financial results currently being defined, a corporate decision close to formalization, or an intermediate step of a transaction can become relevant if they already possess the requirements demanded by the rule. Conversely, a vague hope, an insufficiently outlined hypothesis, or a personal assessment based on publicly available data do not become inside information merely because they precede a price movement.
The date of public dissemination is decisive. A distinction must be made between what circulates within a restricted group and what the market can know effectively and on an equal footing. News reported by open sources, issuer press releases, accessible documents, or analyses built on that data requires a different assessment compared to information acquired in an internal meeting, a negotiation, or through a professional role. Even when rumors exist, it is necessary to understand whether they contain the exact data presumed to have been used.
Which transactions and communications may be relevant
Abuse does not concern only the purchase of securities. Article 8 of the European regulation considers the use of inside information to acquire or dispose of, directly or indirectly, for own account or for the account of a third party, to be relevant. The provision also includes the cancellation or amendment of an order placed before knowing the information. For this reason, the reconstruction cannot stop at the final portfolio balance: submitted, revoked, modified, and partially executed orders, as well as relationships between different accounts, all matter.
Suggestions to third parties also require attention. The European prohibition includes recommending or inducing others to engage in insider dealing and the unlawful disclosure of inside information. In Italian criminal law, Article 184 of the Consolidated Law on Finance (Testo unico della finanza) takes into consideration the acquisition, sale, or other transactions, communication outside the normal exercise of employment, profession, function, or duties, as well as the recommendation or inducement to trade. The current text of Article 184 TUF also distinguishes the position of those who access information by virtue of an office, corporate shareholding, or duties from that of those who receive it for other reasons while knowing its privileged nature.
Executing a transaction for another person does not eliminate the problem. An order placed by a company, executed through an intermediary, or arranged on an account held in the name of a family member may make the evidence more complex, but it does not render the act irrelevant. The European framework also considers transactions carried out for third parties, and when a legal entity operates, it may involve the natural persons who participated in the decision to trade. The decisive fact is understanding who decided, what information they possessed, and for what reason that specific transaction was carried out.
Insider trading, manipulation, and other market abuses
Insider trading and market manipulation are not the same accusation. In the first case, the core of the allegation is the use of inside information. In manipulation, however, attention shifts to orders, transactions, signals, or information likely to give false or misleading signals or to artificially affect prices. The European regulation separately prohibits insider trading, unlawful disclosure of inside information, and market manipulation in Articles 14 and 15 of Regulation (EU) No 596/2014.
The qualification changes the elements to be discussed. Intense buying and selling activity may raise questions, but it does not prove in itself either the use of confidential news or a manipulative intent. For insider trading, the origin, content, precision, and knowledge of the information become central, alongside the connection with the order. For manipulation, the structure of trades, their function on the market, the chronological sequence, and the potential misleading nature of the signal given to other market participants become relevant instead.
The expression "financial crimes" does not replace a precise charge. General formulas may appear in a received document, but the defense requires isolating the concrete conduct alleged: a single transaction, a series of orders, a communication, a recommendation, or multiple connected facts. Confusing the offenses can lead to discussing non-decisive data. The first useful question remains always the same: which provision is indicated and what specific fact is alleged to violate it?
Offense and CONSOB penalty: distinct plans not to be confused
The same context may have criminal and administrative relevance. Article 184 TUF governs the crime of abuse or unlawful disclosure of inside information and provides, in the indicated hypotheses, for imprisonment and a fine. Article 187-bis TUF, reformulated by Legislative Decree No. 107 of 2018 to adapt to the European regulation, provides instead for an administrative pecuniary sanction for the violation of the prohibition of abuse or unlawful disclosure, without prejudice to criminal sanctions when the act constitutes an offense. The text of the reform and related thresholds is published in the Official Journal of Legislative Decree No. 107 of 2018.
The CONSOB proceeding is not a mere formality. The administrative sanction provided for by Article 187-bis can range from twenty thousand to five million euros and, in the cases provided for by the rule, can be increased. Potential ancillary consequences relating to the performance of certain functions are also provided for. These data explain why it is essential to distinguish the administrative charge from any criminal prosecution, without assuming that the existence of one automatically resolves the other.
Not even the lack of profit closes the matter. The absence of an actual profit may be a relevant piece of data to understand the case, but it does not make behavior lawful in itself. Under the administrative framework of Article 187-bis, attempt is equated to consummation; furthermore, the law also considers avoided losses in the sanction increase mechanism. Therefore, two opposite and equally hasty conclusions must be avoided: "I made a profit, therefore I am liable" and "I made no profit, therefore there can be no allegation".
Why chronology and technical data matter in the reconstruction
The sequence of facts is often the heart of the problem. An insider trading allegation requires relating at least four moments: when the information was formed or learned, who had access to it, when the order was placed or modified, and when the news became public. A few minutes can be important, but they cannot be read in isolation. A reliable chronology must distinguish the time of the investment decision from that of the technical execution carried out by the intermediary.
Financial flows must be linked to individuals and the reasons for the transaction. Bank statements, stock exchange orders, emails, messages, corporate minutes, calendars, and internal records can indicate different paths. For example, an investment strategy already documented prior to accessing the news may carry a different weight compared to an order conceived immediately after a confidential communication. At the same time, an alternative explanation must find support in concrete elements and not be limited to a justification formulated after the allegation.
An expert report does not decide liability on its own. The analysis of volumes, prices, execution times, and linked accounts can clarify what happened on the market, but it does not replace the legal verification concerning the information and its use. Similarly, a statistical anomaly is not enough on its own to prove that an order was decided by exploiting inside information. It is the overall connection between technical data, the source of the information, and the conduct of the person involved that must be examined.
How to address an allegation without worsening uncertainties
The first step is to read the document for what it actually alleges. A request for information, a notice of initiation, or a criminal act may concern different facts and rules. It is necessary to identify the referenced transactions, the period considered, the information indicated as privileged, and the role attributed to the recipient. It is not prudent to derive terms or consequences solely from the date of receipt: the procedural requirements depend on the type of proceeding and the indications contained in the document.
Preserving data is different from constructing an explanation. Documents relating to orders, relationships with intermediaries, diaries, communications, and corporate decisions can be useful for reconstructing a verifiable sequence. They must not be altered, artificially selected, or confused with undocumented memories. A hasty response that admits facts not understood or proposes an incomplete chronology can make it more difficult to subsequently clarify the real meaning of the transactions.
Defensive alternatives depend on the contested point. If one of the requirements of inside information is missing, the issue is its nature. If the information exists but the transaction stems from a prior and autonomous decision, the crux is the nexus between the news and the order. If a communication to third parties is being discussed, it is necessary to distinguish unlawful dissemination from the passing of information within the normal scope of a professional function, when such scope is effectively demonstrable. This distinction avoids generic defenses and focuses attention on the fact that can change the outcome of the assessment.
Frequently asked questions
Is internal company news always inside information?
No. It must be precise, non-public, relating to an issuer or financial instruments, and potentially capable of significantly affecting the price. Confidential news that is vague, still lacking defined content, or lacking market relevance does not automatically satisfy these requirements. Its concrete content at the time it is known matters.
If I trade through an account in a family member's name, does the problem disappear?
No. The rules also cover indirect transactions and those for the account of third parties. The account holder's name is only one of the elements to be evaluated: it is necessary to understand who made the decision, who gave instructions, who knew the information, and what the account holder's actual autonomy in the investment was.
Can modifying or cancelling an order be insider trading?
It can be. Article 8 of the European regulation includes the cancellation or modification of an order already placed when they occur using inside information learned subsequently. However, the modification alone is not enough: the allegation must link the order to the information and to the concrete decision to intervene on it.
Does the CONSOB proceeding exclude a criminal proceeding?
No, they are distinct plans. The administrative framework of the TUF is without prejudice to criminal sanctions when the act constitutes an offense. It is therefore incorrect to treat a CONSOB communication as if it alone defines every criminal consequence, nor to ignore its autonomy. The qualification of the facts and the relationship between proceedings depend on the precise charge and its evolution.
If I did not make any profit, am I not at risk of penalties?
The absence of profit is not decisive on its own. It can be a useful element to frame the fact, but administrative regulations equate attempt to consummation and also consider avoided losses. It is necessary to verify first whether inside information, its use, and prohibited conduct exist, without reducing the analysis to the final economic outcome.
A prompt discussion on the contested facts
In an insider trading allegation, precision comes before generic formulas. If you have received acts relating to market transactions, inside information, or CONSOB proceedings in Milan, you can contact me to frame the allegation and immediately distinguish technical data, personal circumstances, and the rules that truly impact your position.