ESMA has published its second report on sanctions imposed by Member State supervisory authorities

The European Securities and Markets Authority (hereinafter: “ESMA”) has provided an overview of the enforcement activities conducted by National Competent Authorities (NCAs) from European Union and EEA Member States in 2024. Across 29 jurisdictions, a total of 975 administrative sanctions and other administrative measures were imposed.

Which EU legal acts were infringed?

The report indicates that NCAs most frequently identified infringements within two key legal regimes:

• Market Abuse Regulation: Under Regulation (EU) No 596/2014 of the European Parliament and of the Council on market abuse (hereinafter: “MAR”), 377 sanctions were imposed with a total value of EUR 45.5 million.
• MiFID II/MiFIR Regime: On the basis of Directive 2014/65/EU of the European Parliament and of the Council on markets in financial instruments (hereinafter: “MiFID II”) and Regulation (EU) No 600/2014 on markets in financial instruments (hereinafter: “MiFIR”), 294 sanctions were applied, with the total sum of penalties approaching almost EUR 45 million.

It is worth noting that in 2024, NCAs did not impose penalties under the Regulation on transparency of securities financing transactions (“SFTR”) nor under the Regulation on markets in crypto-assets (“MiCA”).

What is the structure of the measures applied?

The dominant form of response by the authorities was administrative pecuniary sanctions (fines), which accounted for over 60% of all decisions.

The remaining measures included:

• Cease and desist orders: approx. 10%.
• Other administrative measures: 16%.

Highest administrative penalties in Europe-  which countries are the leaders?

In terms of the value of imposed penalties, the leaders were:

1. France: The French NCA imposed sanctions totalling almost EUR 30 million (of which nearly EUR 21 million related to MAR infringements)
2. Germany: The total value of penalties amounted to almost EUR 16 million, with as much as EUR 14.055 million resulting from infringements of the MiFID II/MiFIR package.
3. Spain: Ranked third in terms of the value of penalties.

However, the statistics regarding the volume (number) of issued sanctions present a different picture:

1. Hungary: number of sanctions imposed by supervisory authorities 182 sanctions.
2. Greece: number of sanctions imposed by supervisory authorities 93 sanctions.
3. Italy: Number of sanctions imposed by supervisory authorities 84 sanctions.

Notably, the total value of pecuniary sanctions exceeded the threshold of EUR 100 million. This constitutes a significant increase compared to 2023, when the total amount of penalties stood at over EUR 70 million.

Interestingly, this dynamic does not result from an increased frequency of enforcement actions, as the number of imposed sanctions remained almost identical (in 2023, only one less sanction was recorded, i.e., 974).

Record penalty and the role of settlements

The highest single pecuniary sanction in 2024 was imposed in Germany. This sanction, amounting to EUR 12.975 million (for MiFID II/MiFIR infringements), was established via an settlement.

Settlement procedures are gaining popularity – these were utilized in approximately one-third of EEA states, mainly in cases concerning MiFID II/MiFIR and MAR. In total, 94 measures (10%) were issued by way of settlement.

Poland in the European context: Noticeable activity of the PFSA

The Polish Financial Supervision Authority (PFSA) distinguished itself in the ESMA report in several key categories:

1. AIFMD: Regarding infringements of the Directive on Alternative Investment Fund Managers, the KNF imposed penalties with a total value of EUR 2,116,229. This is the highest result in Europe, surpassing France (the French NCA applied sanctions amounting to EUR 1.91 million). This result is particularly interesting given the relatively small size of the Polish alternative funds market compared to markets such as Germany or Luxembourg.
2. MAR: The KNF was the second most active supervisor in Europe in terms of the value of administrative penalties for MAR infringements. The total amount of administrative penalties, reaching EUR 4,032,761, allowed Poland to surpass, among others, Norway, Sweden, and Spain in this category.
3. Criminal Sanctions: Poland was among a narrow group of states (alongside e.g., Germany and Italy) that apply parallel criminal sanctions for infringements of financial regulations. In 2024, the KNF was one of only three authorities that submitted reports to judicial authorities regarding potential criminal offences under MiFID II.

Furthermore, the Polish supervisor was the only one in Europe to impose an administrative pecuniary sanction (in the amount of EUR 93,611) for an infringement of Regulation (EU) 2016/1011 of the European Parliament and of the Council on indices used as benchmarks in financial instruments.

Priority of financial penalties in supervisory activities – ESMA observations

In ESMA’s assessment, 2024 did not bring a drastic increase in the number of sanctioning proceedings, but the financial dimension thereof tightened significantly. Supervisory authorities, including the Polish KNF, are increasingly resorting to severe pecuniary sanctions, focusing on key regulations regarding market abuse and investor protection.

This constitutes a clear message to market participants that supervisory authorities are actively combating abuses and prefer applying primarily financial sanctions rather than initiating amicable proceedings.

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