Further investigation by supervisory authorities in administrative proceedings is subject to judicial review – Trial, appeals and compensation

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Ruling on an appeal against administrative sanctions pronounced by the Consob (National Commission for Enterprises and the Stock Exchange), the Court of Cassation recently decided (see judgment no. 17673 of May 31, 2022) that the judge ruling on an appeal against sanctions measures should assess the appropriateness of the time spent by the supervisory authority in question to collect the sources of evidence and determine whether there has been an undue delay and/or prolonged inactivity of this authority.

In accordance with article 14, paragraph 2, of the law of 24 November 1981 no. 689, the time limit for notifying the alleged violation of an administrative provision begins to run when the supervisory authority has completed the preliminary investigation aimed at ascertaining the existence of the subjective and objective elements of the alleged wrongful act.

In this case, the applicants alleged that the Court of Appeal had not verified whether the additional investigative activities carried out by Consob were necessary or not, and maintained that these activities had advanced the time limit for contesting the unlawful act. .

In this regard, the Court of Cassation ruled that, in proceedings against administrative sanctions under the consolidated finance law (namely, Legislative Decree No. 58 of February 24, 1998, as amended) and its provisions d execution, the competent judge – when the question concerns the moment at which the allegedly illegal act was established – must assess the necessity and appropriateness of additional investigative activities carried out by the supervisory authority (in this case , Consob).

Consequently, the competent judge may conclude that an investigation (useless or disjointed) is unreasonable, taking into account the following parameters:

  1. the potential usefulness of such further investigation, not the actual results thereof; as good as

  2. the authority’s interest in conducting a unitary investigation, even represented by the actions of several people carried out at different times.

Finally, the Supreme Court decided that the competent judge is responsible for full knowledge of the legality and legitimacy of the sanction measures, including their amount.

With regard to the latter, the Supreme Court applied the principle of law enshrined in Constitutional Court decision no. 63 of March 21, 2019 according to which the rules in force, which retroactively provide for more favorable sanction treatment, must be applied ex officio by the judge.

Thus, in the case under examination, the Court of Cassation reduced the amount of the penalties initially imposed by the Consob (and confirmed by the Court of Appeal).

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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