3.2 Crisis management procedures for financial
3.2.1 Injunctive remedies (Arts 51–55 CLF)
Early intervention tools, analogous to CLB’s extraordinary injunc- tions and with the similar rationale of preventing serious and poten- tially critical irregularities,9 are provided for CLF’s intermediaries.
This corrective nature is sometimes accompanied, in the CLF, by a marked precautionary function, expressly aimed at avoiding imme- diate danger for customers or markets and not only at refraining from future crisis. The range of the so called injunctive remedies is therefore
significantly differentiated, according to the scope of the remedies themselves and also to the subjects to whom they are addressed. In this sense, it is possible to distinguish the following 10 :
a) Order of termination off anti-juridical behaviours. According to Art.
51, para. 1 CLF, the Bank of Italy or the Consob, to the extent of their duties,11 are assigned a general power of injunction in any case CLF intermediaries infringe the CLF provisions appli- cable to them; the power consists of the comprehensive and all- inclusive possibility to “order to put an end to such irregularities”.
However, such a wide discretion is exercisable only within the limits of proportionality and of the guarantees provided by the Law. 12 This kind of injunction is only subject to the condition of a technically ascertained anti-juridical behaviour and has a percep- tive force aimed at removing the detected irregularities,13 but not necessarily at sanctioning the intermediary.14
b) Prohibition of activities. Where the violations under (a) are not only simple, but likely to prejudice interests of a general nature and 15
“it is a matter of urgency to protect the interests of investors”, Art. 51, para. 2 CLF allows the Bank of Italy or the Consob 16 to prohibit the undertaking of new transactions and to place any other limitation with regard to each type of transaction, single services or single activities. The measure may also be addressed to single branches or establishments of the intermediary, not very differently from what happens with banks according to Arts 78–79 CLB 17 but with a wider range of discretion. 18 The precautionary nature of these injunctions is given by the fact that they can be adopted in case of urgency, to the point that some derogations to the guarantees of a due administrative proceeding are allowed, although the corrective nature typical of early intervention tools is prevalent. 19
c) Provisional administration (Art. 53 CLF). A particular injunctive remedy which is not only an order or a prohibition but a sort of shortened pre-crisis procedure is the power of suspension of the intermediary’s administrative bodies and of simultaneous appoint- ments of a provisional administrator for a maximum duration of 60 days. The tool is more emblematic of a “going concern” than of an early intervention measure and presents many similarities with the bank’s Temporary Management 20 since the triggering
conditions are partly the same: serious administrative irregularities or serious violations of laws, regulations, Articles of Association, committed by the intermediary’s managing bodies. In addition, the occurrence of an urgent danger for customers or markets is required to activate this procedure, which is, for this reason, considered as a precautionary measure,21 with the prevailing inspection and corrective function typical of a shortened SA procedure. 22 In order to ensure a timely intervention, the power to adopt this remedy is exclusively assigned to the Chairman of the Consob, who is asked to previously consult the Bank of Italy only when the injunction’s addressee is a SGR or a SICAV. 23 Not all the serious violation and irregularities are immediately suitable for activating the provisional administration, but only those which are evaluated (by the Chairman of the Consob) to be objectively dangerous for customers (not necessarily “investors”) or markets, after a careful and proportional balance of the differently involved interests.24 The appointed provisional administrator assumes the powers of the administrative bodies of the investment company and is a public official, whose functions are regulated and limited by secondary regulation. 25
d) Remedies addressed to EU intermediaries (whereas the others refer to Italian and non-EU intermediaries). In accordance with the “home country control principle” and in compliance with the MIFID directive, 26 the Bank of Italy and the Consob are not entitled, in principle, to directly address established branches of EU intermedi- aries with the same injunctions they are able to inflict to national and non-EU intermediaries. Thus, in the event of violations of the rules applicable to them according to the Italian order,27 Art.
52, para. 1 CLF only allows these authorities to impose the same generic order of termination of anti-juridical behaviours provided for Art. 51, para. 1 CLF, with the subsequent obligation to inform the competent supervisory authorities of the member state in which the intermediary has its registered office. However, a dero- gation is provided for by Art. 52, para. 2 CLF, whereas the Bank of Italy and the Consob may also significantly impinge on the intermediary’s activity, in the same way as Art. 51, para. 2 CLF,28 if certain conditions are fulfilled.29 After the implementation of the MIFID, another option of intervention has been added 30 concerning the case in which there are grounds to suspect that an
EU intermediary operating in Italy does not comply with obliga- tions deriving from EU regulations, in order to ensure the inter- mediaries’ compliance with EU law. Cooperation among European authorities is significantly enhanced, to the point that each Italian Authority is asked to directly adopt all the necessary measures, including the prohibition of execution of further operations in Italy if, despite measures adopted by the competent authority, the intermediary continues to act in a manner that compromises the interests of investors or regular market operations. 31
e) Remedies addressed to EU andd non-EUU UCITIS. Specific injunctions are also provided for the case of suspected violations of the CLF when the suspected entity is an EU and non-EU collective invest- ment undertaking (precautionary suspension of the marketing of its units or shares, for a period not longer than 60 days) and for the case in which these violations are verified (suspension or even prohibition of the marketing for a longer period). For harmonized EU UCITS’s powers analogous to the ones described for EU intermediaries 32 are assigned to the Consob and the Bank of Italy.