D&O insurance and criminal liability of the corporate authorities of listed companies for market manipulation and insider trading | In Principle

On 27 April 2026 the Polish Financial Supervision Authority (KNF) reported the suspected manipulation of the prices of financial instruments and exploitation of inside information in the trading of shares of three listed companies, submitting to law enforcement authorities a notice of suspicion of commission of criminal offences. This event provides an occasion to reflect on the scope of protection of D&O insurance held by members of the corporate authorities of public companies in analogous situations.

Ban on market manipulation and insider dealing

The ban on market manipulation arises under Art. 15 in connection with Art. 12 of the Market Abuse Regulation (MAR—Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse).

Art. 12 MAR sets forth a catalogue of behaviours qualifying as market manipulation, including for example:

• Entering into a transaction, placing an order to trade, or any other behaviour which gives false or misleading signals as to the supply of, demand for, or price of a financial instrument, or secures the price of a financial instrument at an artificial level (Art. 12(1)(a) MAR)
• Disseminating information through the media which gives false or misleading signals as to the supply of, demand for, or price of a financial instrument, or is likely to secure the price of a financial instrument at an artificial level, including dissemination of rumours, where the person who made the dissemination knew, or ought to have known, that the information was false or misleading (Art. 12(1)(c) MAR).

Insider dealing is also prohibited (Art. 14(a) MAR). Under the MAR, insider dealing means a situation where a person possesses inside information and uses that information by acquiring or disposing of, for its own account or for the account of a third party, directly, or indirectly, financial instruments to which that information relates. Using inside information by cancelling or amending an order concerning a financial instrument to which the information relates, where the order was placed before the person concerned possessed the inside information, also constitutes insider dealing. 

The person’s function is key

Regardless of the legal classification of the alleged offence, a condition for invoking coverage under a directors and officers (D&O) policy is to show a functional connection between the claim and the insured’s exercise of an office within the corporate authorities or performance of managerial duties. As a rule, D&O coverage includes claims made against the insured pursuant to the office that person holds—and not any and all actions by the individual in question on the capital market.

This means that the insurer will examine—both at the stage of reporting the claim and during the eventual dispute—whether the alleged behaviour (e.g. insider dealing or manipulation of the price of a financial instrument) occurred in connection with the competencies, duties or entitlements associated with serving as a member of the management board, the supervisory board, or other corporate body. If this connection cannot be shown—for example when a board member makes a transaction solely as a private investor, outside of his or her corporate duties and without exploiting the position they hold in the company—then coverage under the D&O policy will not be available.

In such case, the claim will be regarded as involving the individual’s private activity, beyond the scope of the insurance. Therefore, verification of this link is a key step in the analysis of any claim filed under D&O insurance, preceding the assessment of whether any exclusions of the insurer’s liability apply, including the exclusion for intentional conduct.

Criminal liability

Both insider dealing and market manipulation are criminal offences under Polish law, exposed to harsh criminal sanctions. Under Art. 181 of the Trading in Financial Instruments Act of 29 July 2005, insider dealing is punishable by a fine of up to PLN 5,000,000, imprisonment of three months to five years, or both. The same potential sanctions are provided for in Art. 183(1) of the act for market manipulation.

These offences can only be committed intentionally. In practice, given the nature of the offence, this requires direct (purposeful) intent. However, market manipulation may also be committed with indirect (knowing) intent, where the perpetrator at least foresaw and acknowledged that his behaviour constituted a punishable offence.

Scope of D&O insurance protection

Any individual could commit market manipulation or insider dealing, but the person’s placement within the authorities of a listed company—particularly their access to confidential information and their influence over the company’s market communications—creates conditions particularly facilitating the commission of such abuses.

The scope of D&O coverage is key in this context. D&O policies typically exclude the insurer’s liability for losses arising out of intentional unlawful acts. Consequently, if a member of the corporate authorities is convicted with legal finality of an offence under Art. 181 or 183(1) of the Trading in Financial Instruments Act, the insurer will not have to cover the fine ordered by the court, the court costs, or the defence costs.

But, significantly, the mere suspicion of commission of a punishable act—i.e. at the stage of the investigation or the judicial proceeding, prior to issuance of a legally final judgment, does not deprive the insured of coverage. As a rule, the insurer will be obliged to temporarily cover the defence costs, as an advance. The exclusion of the insurer’s liability will not arise until a legally final conviction is obtained, confirming that the defendant acted intentionally.

Summary

The initiative taken by the Polish Financial Supervision Authority in reporting its suspicion of market manipulation and insider dealing serves as a reminder that there is a very real and serious risk of personal criminal liability for market abuse on the part of the members of the corporate authorities of exchange-listed companies. In this context, directors and officers insurance plays only a limited protective role.

The main value of D&O coverage at the stage of the investigation and trial boils down to financing the costs of a legal defence—before the insured’s liability is determined—if the event was connected with the function of the given board member or manager. However, this protection is conditional: a legally final conviction for an intentional offence, not to mention a determination that the insured has obtained an unlawful financial gain, triggers the standard exclusion of the insurer’s liability and gives rise to a duty to reimburse the defence costs initially covered by the insurer. Thus the existence of a D&O policy will ultimately not shift to the insurer the economic consequences of intentional unlawful acts.

Mateusz Kosiorowski, adwokat, Anna Szczęsna, Insurance practice, Dr Artur Pietryka, adwokat, Business Crime practice, Wardyński & Partners