Facts of insider trading in ordinary shares of PJSC Raspadskaya established

The Bank of Russia has established facts of misuse by Dmitry V. Smolin, Narine O. Mamaryan, Evgeny E. Panov, Kristina O. Mamaryan, and Greta Zh. Petrosyan (hereinafter collectively, the Persons) of insider information when conducting a series of transactions with ordinary shares of PJSC Raspadskaya (hereinafter, the Issuer and the Shares) in on-exchange trading in November 2020.

In the course of the implementation of the project of EVRAZ plc for consolidating its coal business at the level of PJSC Raspadskaya, the Persons received access to the information about expected decisions on the agenda of the meeting of the Issuer’s Board of Directors related to the upcoming deal for the acquisition of 100% of the authorised capital of AO UCC Yuzhkuzbassugol (hereinafter, the Deal) and for the buyback of the Shares from the Issuer’s shareholders.

Before their publication pursuant to Federal Law No. 224-FZ,¹ these data were classified as the Issuer’s insider information (hereinafter, the Insider Information) as they were precise and specific, contained the market value of the Shares determined by an independent appraiser for the buyback purposes that significantly exceeded current prices for the Shares, and could materially affect market prices for the Shares in on-exchange trading in the case of their dissemination.

The information about the coordination of the Deal terms and the decisions made by the Issuer’s Board of Directors on the approval of the Deal, including the establishment of the price for the buyback of the Shares, was disclosed on 13 November 2020 (hereinafter, the News), which caused a substantial increase in the prices and trading volumes of the Shares in the market for the Shares.

The Persons who received access to the Insider Information were:

— Dmitry V. Smolin, an employee of JSC KPMG² (that provided services for appraising the market value of the Shares to the Issuer) in connection with his participation in this appraisal;

— Narine O. Mamaryan, an employee of EvrazHolding LLC³ (that, along with the Issuer, was part of the same group of companies EVRAZ) in connection with her participation in the preparations for the approval of the Deal;

— Evgeny E. Panov, Kristina O. Mamaryan, and Greta Zh. Petrosyan who are individuals related to Narine O. Mamaryan (her spouse and close relatives).

For several days before the release of the News, these Persons were acquiring the Shares in the main trading mode at prices significantly below the buyback prices. They then sold the Shares when their prices went up after the publication of the News, thus earning income.

According to the results of the investigation, D. V. Smolin, N. O. Mamaryan, E. E. Panov, K. O. Mamaryan, and G. Zh. Petrosyan violated the prohibition stipulated by Clause 1 of Part 1 of Article 6 of Federal Law No. 224-FZ. Besides, N. O. Mamaryan also violated the prohibition stipulated by Clause 2 of Part 1 of Article 6 of Federal Law No. 224-FZ.

Considering the violations revealed, the Bank of Russia, within its competence, has taken a range of measures aimed at preventing similar violations in the future, specifically suspended trading on the accounts of D. V. Smolin, N. O. Mamaryan, E. E. Panov, K. O. Mamaryan, and G. Zh. Petrosyan, among other things.

Furthermore, the investigation has established that, during the period under review, PJSC Raspadskaya, EvrazHolding LLC, and JSC KPMG failed to properly comply with the requirements of Federal Law No. 224-FZ, including as regards the measures to be taken for preventing, detecting, and deterring the misuse of insider information and/or market manipulation.

The Bank of Russia urges issuers and other legal entities listed in Part 1 of Article 3 of Federal Law No. 224-FZ to fulfil their obligation to classify data about the specifics of legal entities’ operations as insider information if the dissemination of such information can materially affect prices for related financial instruments. Additionally, the said persons shall properly fulfil their obligations to take measures for preventing, detecting, and deterring the misuse of insider information that are envisaged by Federal Law No. 224-FZ. Failure to fulfil these obligations involves administrative sanctions.

¹ Federal Law No. 224-FZ, dated 27 July 2010, ‘On Countering the Misuse of Insider Information and Market Manipulation and Amending Certain Laws of the Russian Federation’.

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