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  • CMC 3 Dissemination of False or Misleading Information

    Article 55 of the Markets Law

    1. Article 55 of the Law provides that:

    A person shall not, in the DIFC or elsewhere….

    disseminate information by any means…

    which gives, or is likely to give, a false or misleading impression as to one or more Investments…

    when such person knows or could reasonably be expected to know that the information is false or misleading.

    Means of dissemination

    2. The dissemination of information under Article 55 could, in the DFSA's view, be by a variety of means, including, for example:
    (a) through a Regulatory Announcement Service;
    (b) through media such as the radio, a newspaper or television;
    (c) through the internet, including any form of social media;
    (d) through any market information service such as a trading terminal; or
    (e) by conveying information verbally to another person.

    No transaction required

    3. It should be noted that this type of Market Abuse does not require any transaction to be entered into in connection with the dissemination of information.

    Knowledge that the information is false or misleading

    4. Article 55 requires that the person who disseminates the information either knows or could reasonably be expected to know that the information is false or misleading. That is, it sets out either a subjective or objective test relating to knowledge that must be met.
    5. In assessing whether a person could reasonably be expected to know that the information is false or misleading (i.e. the objective test), the DFSA will consider if a reasonable person in that position would know or should have known in all the circumstances that the information was false or misleading.
    6. If a person disseminates information about an Investment that is false or misleading and the person is reckless as to whether the information is true or false (e.g. if the person gave no thought as to whether it is true or false), the DFSA will consider that the person could reasonably be expected to know that the information is false or misleading.
    7. The DFSA would ordinarily consider that a person did not know and could not reasonably be expected to have known that the information is false or misleading if:
    (a) an organisation has in place effective Chinese Walls to prevent the exchange of information between different areas within the organisation;
    (b) an individual in the organisation did not have access to other information that was being held behind the Chinese Wall; and
    (c) the individual disseminates information that is false or misleading due to his not being aware of that other information (i.e. which makes his information false or misleading) as it is held behind the Chinese Wall.

    Examples of dissemination of false or misleading information

    8. The following are examples of conduct that, in the DFSA's view, may contravene Article 55:
    (a) spreading false or misleading information through the media — for example, a person posts information on an internet forum or via social media which contains false or misleading statements about the takeover of a company when the person knows that the information is not true;
    (b) disclosure of false or misleading information by an Issuer — an Issuer discloses information to the market under its continuous disclosure obligations which gives a false or misleading impression about the true impact of a matter on its Investments (when it knew or could reasonably be expected to know that the information was false or misleading); and
    (c) an investor on a Crowdfunding Platform has invested in Shares of a company using the platform. After holding the Shares for a period of time he decides to sell the Shares as he doubts whether the company will be successful. However, there is no market for the Shares and so he is unable to exit the investment. He therefore posts misleading information on the platform forum suggesting that the company is about to make a significant breakthrough (which will make its Shares valuable).
    Derived from GM9/2014 (Made 1st January 2015). [VER1/01-15]
    [Amended] DSFA GM12/2017 (Made 14th June 2017). [VER3/08-17]