Prosecutor Björn Thorvaldsson is demanding that Baldur Gudlaugsson, former undersecretary of the Ministry of Finance, be sentenced to two years in prison for insider trading. Gudlaugsson’s lawyer Karl Axelsson maintains his client’s innocence.
Reykjavík District Court.
The case’s principal proceedings concluded in Reykjavík District Court yesterday; the verdict will be announced in about four weeks, Morgunbladid reports.
Gudlaugsson is accused of having sold all his shares in Landsbanki, worth approximately ISK 192 million (USD 1.7 million, EUR 1.2 million), on September 17 and 18, 2008, shortly before the banking collapse in early October 2008.
The prosecutor states that Gudlaugsson obtained insider information on the situation of the banks when he attended six meetings with a consultation team appointed by the Prime Minister’s Office, the Ministries of Finance and Economic Affairs. The meetings took place in the period of July 22 to September 16, 2008.
Gudlaugsson also attended a meeting with the bank directors of Landsbanki on August 13, 2008 and the British Finance Minister on September 2, 2008.
The prosecutor reasons that Gudlaugsson used insider information for his personal profit and thus abused his position as a public official.
The violation is serious, Thorvaldsson states, and therefore Gudlaugsson should be imprisoned, at least for two years. The prosecutor is also demanding that the profits from the sale of the shares be confiscated.
Gudlaugsson’s lawyer said it doesn’t appear as if the prosecution differentiates between confidential information and insider information in its case against his client and is demanding that he be acquitted of charges of insider trading and violation in public office.
Axelsson is also asking that the demand that the profit from the sale of the shares be confiscated be dismissed.
Axelsson maintains that the information on which the lawsuit is based was not likely to influence investors, reasoning that in light of the circumstances at the time, all sensible investors would have sold their shares at the same time Gudlaugsson did.
Also, information on negotiations between Landsbanki and the British Financial Supervisory Authority that the bank’s Icesave deposits would be relocated to a subsidiary might have had a positive effect on the exchange rate of the bank’s shares.
The prosecutor explained that it isn’t being stated anywhere that confidential information equals insider information but it is clear that Gudlaugsson had access to information which wasn’t public and not accessible to the public and therefore it is defined as insider information.
The case against Gudlaugsson is considered a milestone in the investigation of the banking collapse in Iceland because it is the first court case to be heard that is directly related to the collapse and might become a precedent for the remaining cases.
Click here to read more about the charges against Gudlaugsson.