Criminal offences relating to securities: an analysis of their legal aspects and significance

Securities are one of the key financial instruments of the modern economic system. Their role in the economy lies in providing certainty in trade, financing and investment, but at the same time they open up opportunities for various forms of abuse and criminal offences. In Serbia, criminal offences relating to securities are regulated both in the core criminal legislation and in ancillary laws governing the capital market. In this text we analyse the most important aspects of these offences, their legal nature, the impact of legislative changes and the importance of sanctioning them in the fight against economic crime.

The legal framework and the definition of securities

Securities are written instruments by which the issuer undertakes to perform the obligation stated in them to the lawful holder. In Serbian legislation, the basic characteristics of securities include formality, a property right, incorporation (the need to hold the instrument in order to exercise the right) and transferability. In practice, securities are divided into serial securities (shares, bonds, bills) and individual securities (cheques, bills of exchange, warehouse receipts). These distinctions are key to understanding the legal aspects of the offences relating to them.

Offences in the core criminal legislation

In the Serbian Criminal Code, Chapter 22 contains offences against the economy, some of which are directly connected with securities.

Embezzlement in the conduct of business activity (Article 224)

This offence concerns situations in which a person appropriates money, securities or other movable property entrusted to them at work in a business entity. Where the property gain obtained exceeds RSD 450,000, the prescribed penalty rises from five to eight years, while for amounts over RSD 1,500,000 the penalty may range from two to twelve years' imprisonment. Practice shows that such cases are rare, particularly where the object of the offence is serial securities that are dematerialised and recorded in the Central Securities Registry.

Forgery of securities (Article 242)

This offence covers making false securities or altering genuine ones with the intention of using them as genuine. The act may also consist of obtaining false securities or giving them to another person for use. Particularly interesting is the question of how this offence applies to dematerialised securities, given that their legal status is defined by electronic records in the Central Registry.

Moreover, forgery of bills of exchange and cheques is not covered by this Article of the Criminal Code, but is treated as the separate offence of forgery of a document (Article 355).

Making, obtaining and giving to another the means of forgery (Article 244b)

This offence relates to producing or obtaining the means for making false securities. It is specific in that the acts may consist of preparatory acts for forgery, but if the forged securities are actually used, Article 242 applies.

Securities-related offences in the group of offences against official duty

In this group of offences, securities are not the main object of protection, but appear as a means of commission. Two significant offences in this context are embezzlement (Article 364) and unauthorised use (Article 365).

Particularly interesting is the question of how this offence applies to dematerialised securities, given that their legal status is defined by electronic records in the Central Registry.

Slaviša Cincarević

Embezzlement (Article 364)

It differs from embezzlement in business activity in that it concerns officials in state bodies and institutions who appropriate money or securities entrusted to them at work. As in the previous case, the amount of the gain obtained determines the gravity of the offence and the penalty.

Unauthorised use (Article 365)

This offence concerns the unauthorised use of money or securities entrusted to an official, where it is not necessary that there be an intention to appropriate them permanently. In practice, proving such acts is challenging, as it requires precise establishment of the perpetrator's intent.

Jurisdiction of the special departments for combating corruption offences

Since 2016, with the adoption of the Law on the Organisation and Jurisdiction of State Authorities in Combating Organised Crime, Terrorism and Corruption, specialised departments for combating economic crime and corruption have been established in Serbia. Their jurisdiction covers most of the offences analysed in this text, but forgery of securities (Article 242) and making the means of forgery (Article 244b) fall outside their remit.

This solution is somewhat illogical, given the importance of securities and the need for specialised training of judicial authorities in this area.

Decriminalisation of issuing cheques and using payment cards without cover

The 2016 Law amending the Criminal Code decriminalised the offence of issuing cheques and using payment cards without cover (former Article 228). This offence had long existed in our legislation, but was removed from the sphere of criminal liability as of 1 March 2018.

The reason for this change lies partly in the overlap with other statutory provisions governing the misuse of non-cash means of payment. However, decriminalisation provoked differing reactions in practice, because such cases had previously made up a significant share of the courts' caseload.

Conclusion

Criminal offences relating to securities are a significant segment of the fight against economic crime in Serbia. Legislative changes since 2016 have introduced new offences and specialised authorities competent to prosecute them, while at the same time some previously existing offences have been decriminalised.

A particular challenge in practice is knowledge of the legal nature of securities and their role in legal transactions. Continuous training of judges, prosecutors and lawyers is necessary for such cases to be prosecuted effectively. In addition, the legal framework needs to be further improved and adapted to the modern challenges of financial crime.

This text expresses the author's professional opinion and does not constitute legal advice for a specific case.