Burden of proof in a market manipulation matter

At the end of last year, the Supreme Court issued a decision in the misdemeanour matter of Arne Randmaa, in which the Financial Supervision Authority fined Mr Randmaa for manipulating the securities market by taking the price of Ekspress Grupp stock to an artificial level and for creating a misleading impression concerning stock trading turnover. Recently, the Supreme Court reviewed the criminal matter of Toomas Tool and Karoly Kirber, also charged with market manipulation. Specifically, Mr Tool was charged with instructing Mr Kirber, a broker, to sell large volumes of AS Arco Vara stock at increasingly lower prices with the aim of bringing the market price of the stock below the level of EUR 0.56.

Concerning the offence of market manipulation, we should emphasise the view of the Supreme Court that a so-called reverse burden of proof applies to the charge of manipulation – that is, the burden of proving any circumstances is also incumbent on the party charged. Specifically, the Supreme Court noted that even though under the presumption of innocence the parties charged does not have to prove their innocence, this does not mean that the prosecution should have to prove the absence of justified reasons for the transaction instructions by the party charged. When carrying out transactions or issuing transaction instructions that meet the elements of market manipulation, the burden of proving the presence of justified reasons will be incumbent on the party that issued the transaction instructions or carried out the transactions.