Unregulated invitations to subscribe on the stockmarket

FI has no statutory supervision responsibility for these invitations to subscribe. The purpose of the investigation has been, at an early stage of the implementation of the new regulations, to draw attention to and, as far as is possible, correct problems or anomalies.

The invitations to subscribe investigated by FI are those primarily directed at smaller investors. Without impartial and correct information these investors do not have the same possibility as professional investors of assessing risks and opportunities. The study shows that the memorandums of association (information material) fail to meet these fundamental standards.

FI states, in summary:

• that there is a great difference in respect of quality in the information material that small investors have access to when they invest in securities that are covered by the prospectus rules and when they do not
• that the memorandums of association that are exempt from the prospectus obligation on account of monetary limits as a rule have inferior information quality and frequently have the character of sales material
• that Sweden is one of the few countries in Europe that has selected a lower monetary limit for when the prospectus obligation arises
• that the market must raise the quality of the memorandums if Sweden, in the long term, is able to harmonize its legislation with the rest of Europe through a future raising of the monetary limit
• that operators in the market are unable to identify any natural coordinator for self-regulation but propose instead that FI takes the initiative in this through issuing general advice or issuing regulations, this actions requires a revision of the law
• that FI has decided to inform consumers on the standards they should demand from memorandums which may indirectly improve the information (see an example of improvement measures on pp. 13-17)

FI will follow up this study during 2007 and - should no improvement have taken place by then - FI will consider requesting the legislative body for the right of regulation.

* Owing to the exemption of prospectus regulations in the (1991:980) Financial
Instruments Trading Act (LHF) that was revised in 2006.

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