Criminal Law Institutions Protecting Investors in Hungary

Abstract

In this study I aim to provide a brief presentation on the institutional framework of investor protection in Hungary with special attention to its criminal law institutions. The topic is highly relevant considering that the coronavirus pandemic, which has lasted since 2020 and is now winding down, was followed in the spring of 2022 by the outbreak of the Russian-Ukrainian war, which has resulted in an unexpected depreciation of currencies and energy crisis affecting the whole European continent. The importance of measures aiming to protect the economy increases during the era of economic crises and safety becomes the priority for the society. The effective functioning of the institutional framework of investment protection may give the sense of security for people who invest savings from more prosperous times. Hungarian law protects the rights and interests of investors on different levels with
a detailed systems of norms and through the functioning of controlling, supervisory and law enforcement organizations. Two funds exist in Hungary, namely the National Deposit Insurance Fund and the Investor Protection Fund, which, together with supplementary insurances can provide financial aid for clients in case of the most serious problems (liquidation procedures) so that they can reclaim their assets. The market surveillance procedures carried out by the National Bank of Hungary, which supervises the whole money and capital market in Hungary, as special procedures of public administration aim to investigate reports concerning
market manipulations. The decisions of the National Bank of Hungary can be modified by civil courts in administrative procedures. This system can only be of such importance that the non-compliant entities of the investment sector might temporarily or finally be removed from the market in the most serious cases. However, large fines imposed on them is a poor consolation for the defrauded
investor. Criminal law has the role of ultima ratio, i.e. it can only be applied when the protection of the market and trust in market cannot be secured by any other means. Hereby I would like to shortly present how the protective system of criminal law has progressed from the change of the Hungarian political system and what the effect of the European community codification was regarding the matter. Two separate crimes will be presented: the illicit manipulation of markets and the insider trading, with a historical approach. In this publication, my aim is not to provide a detailed evaluation of the financial legislation that forms the background of the crimes to be presented. On the other hand, I will present the relevant thoughts of the most prestigious Hungarian scholars in the field of criminal law because this helps to understand the problems that are living with us and waiting to be solved.