On 25 May 2023, the Paris Criminal Court (32nd Chamber), which rules on the cases brought by the French National Financial Prosecutor’s Office (“PNF”), handed down its first ruling on market manipulation.[1] Thierry Boutin, already sanctioned on three occasions by the Enforcement Committee of the French Financial Markets Authority (“AMF”) for market abuse[2], was found guilty of the offence of market manipulation and of the laundering of this offence.

This decision follows the application of the referral procedure (“procédure d’aiguillage”) between the PNF and the AMF.[3] This procedure enabled the criminal court to investigate and prosecute the case in compliance with the non bis in idem principle, prohibiting double jeopardy.

Judgment of the Paris Criminal Court on the “pump and dump” technique recognized as criminal market manipulation

In October 2018, the AMF’s Investigations Department reported to the PNF the actions of Thierry Boutin, uncovered during an administrative investigation relating to the stock of the Dolphin Integration and “any related financial instruments” from 1 January 2016 onwards.[4]

The actions identified were likely to involve the use of the “pump and dump” technique. the defendant was alleged to have approached investors, suggesting that they invest in high-potential shares, while instructing them to act quickly to take the opportunity. The purchase made in this way created a false rise in the share price of the company concerned, encouraging investors to continue investing in these stocks.[5]

In a press release, the AMF points out that, in principle, the perpetrator of this type of manipulation does not mention that he holds a large number of shares or that he is acting at the request of a third party wishing to sell its own shares. However, as soon as the sale is completed, the aggressive canvassing stops and the share price slumps, causing significant harm to investors who see their shares devalued.[6]

The AMF investigation identified four manipulative phases between April 2017 and January 2018 attributable to Thierry Boutin. The use of the “pump and dump” technique enabled him to sell his entire stake in Dolphin Integration. [7]

The AMF’s report enabled the PNF to request the opening of a preliminary investigation (“enquête préliminaire”) on 14 November 2018 with the Paris Police Prefecture’s Financial Brigade (“Brigade financière”), followed by the opening of a judicial investigation (“information judiciaire”) on 30 January 2020, at which point Thierry Boutin was indicted and remanded in pre-trial custody (“détention provisoire”). He was subsequently released and placed under judicial supervision (“contrôle judiciaire”) as of 16 March 2020.[8]

The investigation carried out by the PNF confirmed that in 2016 and 2017, Thierry Boutin has indeed engaged in market manipulation, an offence prohibited by Article L464-3-1 of the French Monetary and Financial Code, as set out in the European Market Abuse Regulation (“MAR”).[9] The investigations showed that Thierry Boutin had manipulated Dolphin Integration’s share price by communicating false or misleading information which had the effect of setting the price at an “abnormal or artificial level” and by using “fictious procedures”.[10]

The inquiry also established that Thierry Boutin had laundered part of the proceeds of the above-mentioned offence, estimated at 2,662,276 euros[11]. This sum was also seized during the investigation, from a securities account he held in the United Kingdom.[12]

The Paris Criminal Court therefore sentenced Thierry Boutin to two years’ imprisonment, the total revocation of a previous 18-months suspended prison sentence for fraud, the payment of a fine of 2,662,276 euros, and the confiscation of the sum seized from his UK securities account. In addition, the Court declared him ineligible for a period of five years.[13]

These penalties reflect the seriousness of the offences committed and the defendant previous convictions. Not only has he previously been convicted of criminal offences, but he has also been sentenced by the AMF Enforcement Committee on three occasions on market abuse cases, for a total of 2.2 million euros.[14]

The PNF investigated the case and referred it for trial following a referral procedure between the PNF and the AMF, which joined the proceedings as a civil party for the first time

In 2015, the French Constitutional Court (“Conseil constitutionnel”) formally prevented double jeopardy, on the basis of the non bis in idem principle, in cases of proceedings brought by the judicial authorities in criminal matters and by the AMF in administrative matters.[15]

The law of 21 June 2016 reforming the market abuse system and completed by the decree of 11 August 2016[16] has, as a consequence of the decision of the Constitutional Court, instituted a so-called referral procedure. This procedure provides for consultation between the judicial authorities and the AMF to avoid duplication of proceedings. In the event of persistent disagreement, arbitration is referred to the Public Prosecutor of the Paris Court of Appeal[17].

In this case, the facts came to light during investigation carried out the AMF, which were reported to the PNF. A referral procedure was then initiated.[18] The PNF thus informed the regulator that it intended to pursue the matter and request the opening of a judicial investigation.

Moreover, the referral procedure did not exclude the AMF from the action against Thierry Boutin. For the first time, the regulator was able to join the proceedings as a civil party. As a result, it was awarded a symbolic 1 euro for non-material damages, as well as reimbursement of 99,064 euros to compensate the costs incurred during the investigation.[19] On these costs, the court underlined that they had been duly justified, although there were no further details in the ruling.

However, the outcome of this case is not yet definitive. An appeal has been lodged against this decision[20] and Thierry Boutin faces an arrest warrant due to his absence at the time of the verdict.[21]