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A recent decision of the Copenhagen City Court confirms that Danish courts take a strict view on insider trading (see International Financial Law Review, March 1997, page 58). A board member of a Danish company was sentenced to five months' imprisonment plus confiscation of about US$100,000 of profit.

It follows from the judgment that the court considers it an aggravating circumstance that the board member acted intentionally and that through his board membership he knew that his company was negotiating a takeover of the company in which he bought shares. The chairman of the board had informed him and the other board members that they were to consider themselves insiders.

It was not relevant that the investment was made by a Swiss broker because the transaction took place through a Danish bank on the Copenhagen Stock Exchange and was settled in Danish kroner. The Danish penal code therefore applied.

The Danish Supreme Court previously indicated that the penalty in cases of insider trading with no aggravating circumstances is three months imprisonment.

It remains to be clarified whether the sellers of the shares may be entitled to compensation from the insider. The City Court stated that this was to be decided in civil action.

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