The Bank of Russia has found that Mikhail Vladimirovich Papkin misused insider information in transactions involving ordinary shares of PJSC Ashinskiy metzavod. According to the central bank, Papkin, who is a member of the company’s board of directors, used confidential information about an upcoming dividend recommendation to profit from share transactions.
On August 12, 2024, the board of directors’ decision recommending a dividend payment of ₽77 per share was published on Interfax’s Corporate Information Disclosure Centre website. This marked the first time in over 20 years that dividends were proposed for these shares and led to a sharp increase in their price and a discrete auction on the same day.
The Bank of Russia reported that Papkin attended the board meeting on August 9, 2024, where issues regarding convening an extraordinary general meeting and setting dividend amounts were discussed. On that day, he bought shares before this insider information became public. After the disclosure on August 12, Papkin sold his acquired shares between August 13 and August 19 at prices significantly higher than what he paid.
The investigation concluded that Papkin’s actions constituted illegal use of insider information. The Bank of Russia stated: “The investigation has thus established that M.V. Papkin used the Company’s insider information illegally. Therefore, the Bank of Russia qualifies his actions as a violation of the ban established by Clause 1 of Part 1 of Article 6 of Federal Law No. 224-FZ.”
Papkin has been held administratively liable for misuse of insider information. The central bank added: “M.V. Papkin has been held administratively liable for the misuse of insider information. The Bank of Russia has sent him a binding order to cease and desist from similar violations in the future.”
In addition to action against Papkin personally, securities market participants and trading organizers have received binding orders from the Bank of Russia to suspend all transactions on his brokerage accounts.
The regulator stressed its position: “The Bank of Russia emphasises that an issuer’s insiders are not allowed to use insider information in transactions they conduct and urges issuers and other legal entities listed in Part 1 of Article 11 of Federal Law No. 224-FZ to duly perform their obligations to take measures to prevent, detect, and suppress the misuse of insider information, including by protecting it and ensuring its confidentiality.”
