Short selling activism is, just as any other financial technique, subject to market abuse rules. However, European rules as set out by MAR subject this peculiar form of activism to excessive constraints. In particular, uncertainties surrounding insider trading rules’ scope of application excessively constrain the exchange of information between market actors, to the expense of market efficiency. Likewise, the investment recommendations regime has been built with analysts selling their research and whose independence needs to be guaranteed in mind, rather than hedge funds defending a specific investment thesis. Therefore, the application of investment recommendation rules to activist funds is a source of inconsistencies calling for a better calibration of existing rules. In this presentation, Sophie Vermeille discusses the application of MAR to short selling activism and illustrates it with the Solutions 30 case.
