Yesterday the Supreme Court of Iceland found Sigurjón Árnason, the CEO of failed bank Landsbankinn, one of the three big Icelandic banks which failed in 2008, along with three of his deputies, guilty of systematic and extensive market manipulation. The court sentenced Sigurjón to 1.5 years in prison. This sentence comes in addition to an earlier sentence of 3.5 years he had received for market manipulation in a separate ruling in the same case. This brings Sigurjón’s prison term to a combined five years.
Read more: More bankers behind bars: Three Landsbankinn bosses sentenced to prison
Guilty of systematic and extensive market manipulation
The court found in its ruling that the four had engaged in systematic manipulation of the market for Landsbankinn shares in the lead up to the financial crash of 2008, specifically during the last week prior to the collapse of the bank. The court found that the large scale purchase of Landsbankinn shares, which were executed by Ívar Guðjónsson the head of proprietary trading and the traders, Júlíus Steinar Heiðarsson and Sindri Sveinsson, created a false impression of the price and demand for Landsbankinn shares, inflating their price. Sigurjón, the court argued, was intimately involved in the trades, which could not have been carried out without his knowledge and direction.
Harsher sentences and a reversal of a previous acquittal
With its ruling the Supreme Court extended the sentences the four had received by the Reykjavík District Court. Sigurjón’s sentence was extended by six months, to 1.5 years in prison. Ívar’s sentence was increased by 15 months, from nine months in prison to two years. Júlíus was sentenced to one year in prison and Sindri to nine months.
Read more: 26 bankers already sentenced to a combined 74 years in prison
The District Court of Reykjavík had previously sentenced Júlíus to nine months but acquitted Sindri. This ruling therefore continues the pattern the Supreme Court seems to have established in cases relating to the 2008 financial collapse, which is to extend sentences handed down by the District Court of Reykjavík and overturn acquittals.
Claimed market manipulation was really informal market-making
The defendants claimed that their actions should be considered as “informal market-making” and were, as such legal and recognized as a routine and normal type of transaction in banking.
The court rejected this defence as absurd, pointing out that market making operations require a formal contract between the financial institution and corporation whose shares a market was being made for, that this contract be public and that the corporation whose shares a market is being made for has no way of influencing the market price. Market making is only intended to insure liquidity, not maintain a certain price or give an impression of an inflated level of demand. Moreover, the law expressly bans financial institutions from engaging in market making for their own shares.
Yesterday the Supreme Court of Iceland found Sigurjón Árnason, the CEO of failed bank Landsbankinn, one of the three big Icelandic banks which failed in 2008, along with three of his deputies, guilty of systematic and extensive market manipulation. The court sentenced Sigurjón to 1.5 years in prison. This sentence comes in addition to an earlier sentence of 3.5 years he had received for market manipulation in a separate ruling in the same case. This brings Sigurjón’s prison term to a combined five years.
Read more: More bankers behind bars: Three Landsbankinn bosses sentenced to prison
Guilty of systematic and extensive market manipulation
The court found in its ruling that the four had engaged in systematic manipulation of the market for Landsbankinn shares in the lead up to the financial crash of 2008, specifically during the last week prior to the collapse of the bank. The court found that the large scale purchase of Landsbankinn shares, which were executed by Ívar Guðjónsson the head of proprietary trading and the traders, Júlíus Steinar Heiðarsson and Sindri Sveinsson, created a false impression of the price and demand for Landsbankinn shares, inflating their price. Sigurjón, the court argued, was intimately involved in the trades, which could not have been carried out without his knowledge and direction.
Harsher sentences and a reversal of a previous acquittal
With its ruling the Supreme Court extended the sentences the four had received by the Reykjavík District Court. Sigurjón’s sentence was extended by six months, to 1.5 years in prison. Ívar’s sentence was increased by 15 months, from nine months in prison to two years. Júlíus was sentenced to one year in prison and Sindri to nine months.
Read more: 26 bankers already sentenced to a combined 74 years in prison
The District Court of Reykjavík had previously sentenced Júlíus to nine months but acquitted Sindri. This ruling therefore continues the pattern the Supreme Court seems to have established in cases relating to the 2008 financial collapse, which is to extend sentences handed down by the District Court of Reykjavík and overturn acquittals.
Claimed market manipulation was really informal market-making
The defendants claimed that their actions should be considered as “informal market-making” and were, as such legal and recognized as a routine and normal type of transaction in banking.
The court rejected this defence as absurd, pointing out that market making operations require a formal contract between the financial institution and corporation whose shares a market was being made for, that this contract be public and that the corporation whose shares a market is being made for has no way of influencing the market price. Market making is only intended to insure liquidity, not maintain a certain price or give an impression of an inflated level of demand. Moreover, the law expressly bans financial institutions from engaging in market making for their own shares.
