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Supreme Court of Denmark

Disclosure of inside information to a trade union not prohibited 

Case no. 219/2008
Judgment 14. May 2009

The Public Prosecutor




Employee representative’s disclosure of inside information to his trade union was not covered by the prohibition against disclosure of inside information

Knud Grøngaard and Allan Bang had been convicted by the High Court for violation of the provision in the Danish Securities Trading Act on disclosure of inside information. In August 2000, Knud Grøngaard, who was an employee representative on RealDanmark’s Board and Chairman of the Danish Financial Services Union’s chapter in RealDanmark, disclosed to the Chairman of the Danish Financial Services Union, Allan Bang, that the Board had decided to launch merger negotiations with Danske Bank. At the end of September, he disclosed the date of publication of the merger and the exchange ratio between the companies’ shares.  Allan Bang then disclosed this information to this vice-chairmen and closest employees himself. The High Court found that it had been proven that the information had primarily been disclosed for the sake of the Union’s planning of the merger in light of the expected large number of dismissals that would result. The approx. 20,000 employees affected by the merger represented a large part of the Union’s members, and the merger would mean that up to 3,500 jobs would be cut.

During the proceedings before the City Court, a question for preliminary ruling had been referred to the Court of Justice of the European Communities regarding the scope of the derogation in the Insider Directive regarding the right to disclose inside information if this is done in the ordinary course of the person’s function.

The Supreme Court gave judgment in favour of the two defendants. The Supreme Court ruled that it was line with the purpose of and preparatory work for the derogation that an employee representative was generally entitled to discuss issues regarding a merger of great importance to the employees with the chairman of his or her trade union. In addition, the Supreme Court stated that the disclosure was not only based on a wish to prepare for the merger, but also a wish to discuss the position to take on the planned merger with Allan Bang, just as the information on the exchange ratio was disclosed in order for the Union to assess whether there was an opportunity for a counter offer not having the same consequences in respect of job loss. The Supreme Court found that Knud Grøngaard’s disclosure was motivated and done in the ordinary course of his function as an employee representative. Similarly, Allan Bang’s disclosure of the information to his closest employees was done in the ordinary course of his work as the Chairman of the Financial Services Union.

The Supreme Court thus changed the judgment of the High Court.

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