(News Bulletin 247) – The Paris Court of Appeal recalled the importance of guaranteeing confidence in the financial markets, in the context of a case concerning a British financial journalist. The latter had exchanged with regular sources about market noises on a possible takeover of LVMH on Hermès. These sources then used these rumors to then carry out profitable financial operations.

Preserving freedom of the press or guaranteeing confidence in the market? The Paris Court of Appeal on Thursday gave the scoop to the second principle in a case concerning a British financial journalist who mentioned an article with sources about a possible financial transaction to come.

The Court of Appeal made “the public interest aimed at protecting the integrity of these markets prevail” over “the interest of the public to learn of market rumors”, she justified in a press release. And this, even if “the disclosures” to the sources are “strictly necessary for the accomplishment of the activity of journalist”, she assures.

A decision contrary to the freedom of the press?

The decision did not fail to surprise. “The search for a fair balance between the interests involved”, in particular financial power, is “a logic totally contrary to the fundamental principles of freedom of the press”, denounced to AFP Christophe Deloire, secretary general of Reporter Without Borders.

The case dates back to 2011. Working then for the DailyMail after twenty years in the FinancialTimesGeoff Foster, a journalist recognized for the quality of his articles, had discussed with regular sources about market rumors about a possible takeover bid by the luxury giant LVMH for its competitor Hermès, referring to an article he intended to write soon.

These sources and some of their contacts used the information from these discussions with the journalist to carry out profitable financial operations by investing in financial securities before the publication of the article, which caused prices to rise on the Paris Stock Exchange.

Dissemination of privileged information

The AMF had sentenced Mr. Foster in 2018 to a fine of 40,000 euros, considering that he had transmitted privileged information. The four people who used the information were fined a total of 305,000 euros. The journalist challenged the sanction before the Paris Court of Appeal.

The latter initially requested the clarification of the Court of Justice of the European Union (CJEU). In March 2022, she attempted a balancing act between the principle of freedom of the press and the European regulation on market abuse.

She considered that the disclosure of privileged financial information by a journalist is lawful when it is necessary for the exercise of his profession and that it respects “the principle of proportionality” between the general interest and private interests. But “if from now on the behavior of journalists, even their productions, must be limited by the interests of one or the other, it is very dangerous”, continued Mr. Deloire.

The Paris Court of Appeal also considered that Mr. Foster “acted in accordance with the rules and codes governing his profession” and that his exchanges with his sources had indeed “journalistic purposes”.

However, it considered that “the disclosures in question are not proportionate” in relation to the “private interests (of certain investors)” but also to “integrity” and the need to “guarantee the confidence of all investors ” in the market.

“A judgment that encourages journalists to be cautious”

Thus, “even if a journalist does so as part of his job, he can no longer transfer privileged information”, summarizes Frédéric Peltier, lawyer specializing in financial regulation.

“Giving the Autorité des Marchés Financiers the ability to judge what is necessary or not in journalistic investigations is a danger for the freedom of the press”, he continues.

If this case law is confirmed – an appeal to the Court of Cassation is still possible – “the French legislator must create a system of protection for journalists”. For his part, François-Henri Briard, lawyer at the Court of Cassation and the Council of State, also considered that “this judgment encourages journalists to be cautious” in working with their source.

If it confirmed two of the three breaches pronounced at first instance, the Paris Court of Appeal however reduced the fine to 10,000 euros due to the “legal uncertainty” which existed at the date of the facts.

(With AFP)