Iceland Mag

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Iceland Mag

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Kaupthing bank trial: might be one of the largest alleged market conspiracies seen in Europe

  • Failed bank Kaupthing was one of Iceland’s big three banks that crashed in the autumn of the 2008. The other two were Glitnir and Landsbankinn. All three are still in winding-up proceedings.

The criminal case that the Icelandic Office of the Special Prosecutor (IOSP) is bringing against nine Kaupthing senior staff, began in the Reykjavik County Court today. More than fifty names are on the witness list.

The alleged market manipulation conspiracy case is the largest in a series of fraud prosecutions that have been brought to court since Iceland’s  three major banks crashed in the autumn of 2008. 

Earlier this year the Supreme Court of Iceland sentenced four former heads of failed bank Kaupthing to jail for their role in a another case of market manipulation of share prices in Kaupthing bank in 2008.

Read more: Former heads of failed bank Kaupthing receive the heaviest jail sentences for financial fraud in Iceland’s history

Three of those are also charged in the trial that began in the Reykjavík court today: Hreiðar Már Sigurðsson, Magnús Guðmundsson and Sigurður Einarsson. Former CEO, Hreiðar Már, received a five-and-a-half year long sentence, which is the heaviest sentence for financial fraud in Iceland’s history.  

Together with the six other former Kaupthing staff on trial they are accused of trying to artificially inflate share prices in the bank in 2008, by secretly using Kaupthing’s own funds to buy shares in the bank indirectly.

When Kaupthing fell it was Iceland’s largest bank and had emerged as a serious international financial institution. Thus this might be one of the largest alleged market conspiracies cases ever seen in Europe.

According to a report made by The Special Investigation Commission of Alþingi (established by the Icelandic Parliament in December 2008) more than 40% of Kaupthing’s shares were held by the bank as loan collateral, when it fell in the autumn of 2008.

Read more: Three former Landsbanki executives sentenced to jail

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