Market manipulation case remitted for a new trial

Case no. 221/2015
Judgment delivered on 24 August 2016

The Prosecution Service
vs.
T1-T4

The High Court had dismissed the claim against T1-T4 of violation of the prohibition against market manipulation in the then applicable Danish Securities Trading Act. The High Court found no evidence that the placing of two purchase orders was likely to influence the price of a bond in a direction deviating from the "value on the market" within the meaning of Section 38(1) of the Act.

The issue to be considered by the Supreme Court was whether the High Court's judgment should be set aside and the case remitted for a new trial, because the High Court had applied section 38(1) incorrectly when considering whether the two purchase orders deviated from the "value on the market" of the bond.

The Supreme Court found that the expression "value on the market" in Section 38(1) should be interpreted as the most recently quoted stock market price, where the price is the result of a transaction between independent parties with opposing interests. However, the stock market price may be deviated from if it cannot be regarded as a fair representation of the value on the market of the security. This includes situations where general changes have occurred on the market since the most recently quoted stock market price, such as interest rate changes, or whether the issuer of the security has provided information influencing the value of the security in a company announcement or the like. However, the price stated in a sales order etc., which is not applied in a transaction, does not in itself show that the most recently quoted stock market price cannot be considered fair.

The High Court had not applied the most recently quoted stock market price in its assessment of the value of the bond on the market when the purchase orders were placed. Accordingly, the High Court had misinterpreted the concept of "value on the market" in its judgment. The Supreme Court thus set aside the High Court's judgment and remitted the case for a new trial in the High Court.