Former Iceland Bankers Charged with Market Abuse Skip to content

Former Iceland Bankers Charged with Market Abuse

By Iceland Review

Iceland’s Special Prosecutor Ólafur Þór Hauksson has filed charges against four former employees of Glitnir Bank for breach of trust, market manipulation and violation of the laws on financial statements in connection with the bank’s ISK 3.8 billion (USD 29 million, EUR 22 million) loan to the company BK-44 in November 2007.

glitnir-headq_ipaGlitnir Bank. Copyright: Icelandic Photo Agency.

The company was owned by Birkir Kristinsson, former superior of Glitnir’s private banking service, who is one of those facing charges. The other three are Jóhannes Baldursson, managing director of the bank’s market trade, broker Elmar Svavarsson and Magnús Arnar Arngrímsson, who was managing director of the bank’s company division, Fréttablaðið reports.

Magnús is also facing charges in the Aurum case.

The charge is in six parts.

1) Jóhannes, Magnús and Elmar are charged with market manipulation by granting the loan to BK-44 for buying shares in Glitnir. The shares are said to have been bought back by Birkir in the summer of 2008 at a premium, resulting in a loss of ISK 1.9 billion.

2) Elmar and Jóhannes are charged with breach of trust by making an oral agreement with Birkir on that he couldn’t lose anything in the trade as the shares would be bought back later at the old price regardless of the market price.

Birkir is in fact said to have profited ISK 86 million in the process.

3) Elmar is charged with breach of trust by settling the agreement thus that Birkir would profit from it.

4) Birkir is charged with being party to the breach of trust, or else connivance and money laundering. According to the charge, he should have known that the arrangement was at odds with the bank’s regulations.

5) Jóhannes, Elmar and Birkir are charged with market manipulation as the trade likely gave the market a misleading idea of demand for shares in Glitnir.

6) Birkir is charged with a major violation of the laws on financial statements by not mentioning the loan at all in the financial statement of BK-44 for 2007.

ESA

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