Biosynex Fine Amount: €930,000 across multiple parties
Date: 25 July 2024
Violation Period: March-April 2020
Primary Violation: Insider Trading
The French Autorité des Marchés Financiers (AMF) imposed fines totaling €930,000 on Biosynex and its senior leadership team.
The enforcement action centers around events in March-April 2020, during the early stages of the COVID-19 pandemic, when Biosynex was developing diagnostic tests.
The company faced three distinct regulatory failures. First, they failed to follow proper disclosure protocols, instead releasing market-sensitive information through a regional newspaper interview. Second, when needing to raise capital for test production, the company's executives sold personal shares while possessing non-public information about an impending treasury share sale. Finally, over a prolonged period, the company's leadership consistently failed to meet regulatory deadlines for reporting their share transactions.
The case revolves around three main breaches:
Selective Disclosure:
In March 2020, Biosynex's CEO gave an interview about the company's COVID-19 diagnostic tests.
The interview was published on March 23, 2020, revealing information about PCR test launches without a proper market announcement.
Instead of making a formal company announcement through official regulatory channels (like a press release or regulatory filing that would be simultaneously available to everyone), the information was first revealed through an interview with a journalist at the Journal des Entreprises (JDE). This meant that initially, only readers of that publication had access to the information about Biosynex's plans to launch COVID-19 tests.
Access to this information was limited in several ways:
The JDE typically requires a subscription, though in this case, it was temporarily open access.
The article only reached about 1,570 readers in March 2020.
The information was only available on a regional news website, not through standard market information channels that investors rely on.
The AMF's rules (specifically Articles 221-3 and 221-4 of the AMF General Regulation) require that price-sensitive information must be distributed in a way that:
Reaches the widest possible audience.
Provides complete information.
Allows all investors to access it simultaneously.
Is distributed through official channels that ensure the information's reliability.
The AMF determined this constituted selective disclosure of inside information, as the full details were not simultaneously made available to all market participants through appropriate channels.
Insider Trading
On April 6, 2020, Biosynex's board of directors made a significant decision: they would sell all of the company's treasury shares (about 434,000 shares, representing 4.75% of the company's capital) to raise money.
The stated purpose was to finance the building of a strategic test inventory for COVID-19 mass testing.
Between April 7-17, before this decision was publicly announced, the directors and their holding companies sold their personal shares. They appeared to be acting on the knowledge that a large block of shares was about to hit the market.
The directors knew this treasury share sale would likely affect the stock price, and the timing of these sales, ahead of the public announcement, led to insider trading charges.
The transactions involved:
50,597 shares sold by Larry Abensur
82,500 shares sold by Thierry Paper
26,000 shares sold by Thomas Lamy
31,800 shares sold by Elie Fraenckel
The AMF calculated the "avoided losses" for each party by comparing their selling prices to what they would have received if they had waited until after the public announcement. For example:
Larry Abensur avoided losses of €92,306.
Thierry Paper avoided losses of €117,820.
Transaction Reporting Failures
Multiple directors failed to properly report their share transactions to the AMF within the required timeframe (under EU regulations (specifically Article 19 of the Market Abuse Regulation - MAR), directors and their closely associated entities have to report their share transactions to both the company and the regulator (in this case, the AMF) within three business days of the trade).
These reporting failures occurred between April 2020 and May 2021.
Larry Abensur and ALA Financière:
Nine of Abensur's personal transactions were reported late.
Seven of ALA Financière's transactions were reported late.
The average delay was about 8 days for Abensur's trades and 5 days for ALA Financière's trades.
Thomas Lamy and AJT Financière:
Six of Lamy's personal transactions were reported late.
Five of AJT Financière's transactions were reported late.
Average delay was about 6 days.
Elie Fraenckel:
Three transactions were reported late.
His delays were longer, averaging about 11 days.
The defendants argued that the COVID lockdown had disrupted their normal reporting processes, particularly claiming their broker was slow in providing trade confirmations. However, the AMF rejected this defense for two reasons:
The AMF found that the broker had actually made electronic notifications available immediately - the directors just needed to have registered their email addresses on the trading platform.
The AMF views reporting obligations as "objective requirements" - meaning external circumstances (even a pandemic) don't excuse the obligation to report on time.
This case highlights several important compliance lessons:
The importance of having robust reporting systems that don't rely on manual processes.
The need for backup procedures when normal processes might be disrupted.
The fact that regulatory deadlines generally don't flex even during extraordinary circumstances.
The responsibility lies with the individual/entity to ensure compliance, not with their service providers.
The AMF imposed the following fines:
Biosynex: €50,000
Larry Abensur (CEO): €160,000
ALA Financière (Abensur's holding company): €300,000
Thierry Paper (Deputy MD): €150,000
Axodev (Paper's holding company): €80,000
Thomas Lamy (Deputy MD): €50,000
AJT Financière (Lamy's holding company): €70,000
Elie Fraenckel (Board Member/CFO): €70,000
"The Committee held that, at the time of the interview, the information relating to the imminent launch by Biosynex of PCR (Polymerase Chain Reaction) tests to diagnose Covid-19 was inside information."
"The manquement aux obligations déclaratives [failure to meet reporting obligations] présente un caractère objectif [is an objective breach], de sorte que l'argument invoqué par les mis en cause relatif au contexte sanitaire exceptionnel est inopérant [making the exceptional health context argument irrelevant]."
"The Committee further held that Mr Abensur, Thomas Lamy and Thierry Paper, Deputy Managing Directors of Biosynex, Elie Fraenckel, Board Member and Chief Financial Officer of Biosynex, and the holding companies of some of these directors had committed insider trading breaches by selling Biosynex shares while in possession of inside information relating to the company's decision to sell all its treasury shares."