Decision of the FSMA Sanctions Commission in the Nyrstar case challenged before the Market Court

The Market Court recently received a petition for the annulment and reform of the decision of the Sanctions Commission of financial watchdog FSMA in the Nyrstar case. The commission had found Nyrstar NV guilty of market manipulation. The company was fined €80,000, but its board members were acquitted. The commission ruled that there had been insufficient investigation into their individual roles in the manipulation. That ruling is now being challenged. The ball is therefore in the court of the Market Court, which may overturn the Sanctions Commission’s decision.

After years of investigation and two extensive reports, the FSMA’s auditor concluded that Nyrstar NV had disseminated false and misleading information in 2018. The auditor stated unequivocally that Nyrstar’s situation was deliberately portrayed as more favorable than it actually was. He noted that the board members had played an active role in manipulating the market. On that point, however, the Sanctions Commission did not follow the auditor’s findings. This is a strange twist in the decision, since a company obviously cannot issue communications without someone holding the pen.

Kris Vansanten of Nystar Collective is also sharply critical of the Sanctions Commission’s decision, concluding that the FSMA is a toothless tiger in desperate need of new teeth. In an opinion piece published by De Bestuurder and also available on this website, he wrote:

“The financial watchdog turns out to be nothing more than a wagging puppy that falls in line with large players with deep pockets and an army of lawyers. This happens through organized internal obstruction via institutionalized procedures and bodies that offer numerous escape routes to defendants through years of procedural battles and manipulations behind closed doors.”

Vansanten also denounces the fact that the defendants were given two full years to construct their narrative and exclude crucial evidence on purely procedural grounds. They were also granted five full days to present their arguments — all behind closed doors, without any right of reply for the minority shareholders affected by the decision. One might well ask: where is the level playing field and the right to a fair trial? Especially given that the ruling demonstrates that the Sanctions Commission relied heavily on post factum statements — that is, reconstructions made afterward to justify the conduct of Nyrstar’s board members. Documents that actually circulated at the time of the market manipulation were either not submitted or largely ignored.

Anyone reading the extensive decision of the Sanctions Commission must conclude that little was done with the available evidence. The commission largely allowed itself to be guided by the defense of Nyrstar NV and its directors. It is therefore not surprising that a number of minority shareholders are contesting the commission’s decision.

The appeal before the Market Court might well be the ultimate test of the credibility of financial supervision and the enforcement of corporate governance rules in Belgium. Because the ruling of the Sanctions Commission creates a dangerous precedent. If directors are able to intentionally disseminate false and misleading information without facing personal repercussions, it erodes corporate integrity and market stability. Such lack of accountability for board members of a listed company severely damages not only investor confidence but the very foundation of market trust.