Sigrún Davíðsdóttir's Icelog

Three ex-Landsbanki bankers sentenced in market manipulation case – updated

with 10 comments

Three ex-Landsbanki bankers have been sentenced (in Icelandic) at Reykjavík County Court in an extensive market manipulation case. The bankers were charged with manipulating Landsbanki share price almost a year up to the collapse of Landsbankinn October 7 2008. The action was judged to have influenced the share price of the bank, i.e. slowed its fall and prevented the shares falling in price. Consequently, price movements were not properly reflected and the share price appeared stronger than it would have been without the intervention.

Landsbanki ex-CEO Sigurjón Árnason was sentenced to a 12 months imprisonment, of which nine months are suspended. Two others, Júlíus Steinar Heiðarsson and Ívar Guðjónsson both working on the bank’s proprietary trading desk, were sentenced to nine months imprisonment, six of which are suspended. The fourth charged, Sindri Sveinsson, was acquitted.

*The judgement is not yet on the Court’s website but will be attached here when published. – Published here.

Updated: an addition now that I have read the judgment (Nov 23 2014):

The OSP brought the case following charges to the OSP made by the FME in October 2010. The original charges were against 18 ex-Landsbanki employees for market manipulation since May 2003 (nothing less) until the collapse of the bank in October 2008.

This means that according to the regulator, Landsbanki shares were actually manipulated for over five years.

In the end, the OSP charged 4 ex-Landsbanki managers for market manipulation from beginning of November 2007 until the last day Landsbanki shares were traded on the Icelandic Stock Exchange October 3 2008.

The sentences are far more lenient than the prosecutor had asked for. The judges (three in all) thought there were two mitigating circumstances: the deeds took place at a time of great turbulence in the markets and the bankers might be seen as having tried to save the bank (as they had claimed themselves) – and the deeds took place in 2008, i.e. a long time ago.

Re the first, buying the bank’s shares and risking the bank’s own capital is not the standard reaction (or even a creative one) in turbulent times and credit crunch.

Re the long time: financial crimes are rarely visible with bare eyes. Staff at the Icelandic Stock Exchange did indeed notice some of the actions taken and reported them to the FME, which resulted in an FME investigation and charges later on.

Interestingly, the day after the Landsbanki judgment three British businessmen were convicted for fraud in a case brought by the SFO. The fraud took place in 2007 and 2008, as in the Landsbanki case. The case was referred to the SFO, which opened an investigation in August 2009. One of those convicted is Chris Ronnie, known in Iceland as a client of Kaupthing.

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Written by Sigrún Davídsdóttir

November 19th, 2014 at 10:25 am

Posted in Iceland

10 Responses to 'Three ex-Landsbanki bankers sentenced in market manipulation case – updated'

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  1. At long last someone is listening to us. We will get that cava soon.

    Jean Foster

    19 Nov 14 at 5:19 pm

  2. They say in the case of a CEO The Buck stops there. These convicted criminals designed and marketed toxic financial products to be fed to the elderly and vulnerable through Junkers morally bankrupt Luxembourg. Yet the false accounting and other fraudulent behaviour continues. For sure, Hamilius will at some stage get a striped sun tan or worse.

    Roger Fish

    21 Nov 14 at 10:32 am

  3. Mme Hamilius in Luxembourg, as the administrator of Landsbanki Lu must now stop and seriously review the Equity Release scheme that was sold to hundreds of unsuspecting pensioners across Europe during the tenure of these three criminals that have been, quite rightly jailed this week.

    We have been telling her, and “her” courts in Luxembourg for years that what we were sold was fraudulent, illegal and toxic and that if she continued to ignore this then she could quite possibly be facing a charge of money laundering, amongst many things.

    The message is quite clear, Iceland can see it, France can see it, why can’t she and Luxembourg see it ?

    Nina Foster

    21 Nov 14 at 1:55 pm

  4. Iceland puts Landsbanki Iceland Managers in jail. OK , very good. How that can lead to Landsbanki Luxemburg? Very easy: manipulation of shares = manipulation of companies value = manipulation of Rating of company = manipulation of BONDs of the company = manipulation of the sales price of the BONDs in Luxembourg to the victims.
    Another question is why the CSSF in Luxembourg has slept so deep and didn’t realized this manipulation nor something else. They have stamped the BONDs very quickly for the sales market.
    Next question : what’s happen if the liquidator will come to say : iceland is Iceland and this has nothing to do with Luxembourg (she did this always). This is total nonsens because the daugther (Landsbanki LUX) had exact knowledge about the bonds and the delicate faked values and rating. They were long enough in this business to realize what’s happened. Do not let them come to say “we had not ides about it”.
    We counting the days of the Luxembourg manager of Landsbanki.

    Jobst K. Hollmeier

    21 Nov 14 at 2:05 pm

  5. THE CRASH in Europe was enabled by Behind-Closed-Doors Luxembourg yet Iceland was blamed.

    LUXEMBOURG’S ROLE in the Financial crash, especially it’s role in enabling the ICELAND bank crash is becoming clearer every day, as we see how they try to keep the corpses in the closet and avoid investigations and accounting for their important role in the Financial Crimes behind the Crash.
    The huge role Luxembourg played in the banking crisis and especially by enabling all the criminal transactions and dealings to pass through Luxembourg with it’s opaque CLEARSTREAM and murky CENTRAL BANK, who cannot and will not allow any auditing or inspection of their accounting, has been greatly underplayed.

    We can also see today that a huge number of International Bank bankruptcies are conveniently run through LAX Luxembourg as Closed- Door hearings and disappearing funds through opaque banks, is a Luxembroug speciality .

    It is not just a coincidence that the administration of the 3 suspicious Portuguese bankruptcies, will be handled not only in Luxembourg, but also by the same judge Karin Guillaume , in charge of supervising the fraudulent Landsbanki case with her friend Yvette Hamilius, who was, also along with her lawyer Rosario Grasso of KleyrGrasso assoc. law firm also handling the infamous BCCI bankruptcy administration which is known to be the worst in history!

    The market manipulation, excessive loans to their owners and highly suspicious transfers off-shore by Kaupthing, Glitnir and Landsbanki, were invariably carried out through Luxembourg.


    The crash was no ordinary crash.

    PwC Price Waterhouse Cooper was in charge of the Landsbanki accounting which was later approved ( or not disapproved) by Deloitte’s and then suddenly, something suspicious happened in 2009, when Yvette Hamilius’ co-administrator, FRANZ PROST either resigned or was kicked out.
    As we know, Juncker’s Luxembourg LIES through it’s teeth so one does know that “official” versions are very often VERY UNSAFE and the direct opposite of the truth.
    The “official” version is that FRANZ PROST resigned, having reviewed the Landsbanki Luxemborug PwC accounting. (remember that FRANZ PROST was with Deloitte’s controlling naughty PwC)

    PW C was also the accounting company for… BCCI, the worst bankruptcy in the world and yet we find the same PwC, the same KlyrGrasso associates as liquidators along with the same Yvette Hamilius and Karin Guillaume as judge, as Landsbanki Luxembourg.

    How many suspicious bankruptcies with vanishing funds and suspicious transfers in the last weeks and refusals by Luxembourg Courts to hold investigations into false accounting? how many have had the accounting vanish as in the Landsbanki case?

    Iceland’s S.I.C. Report and its special investigation into the criminal activity of the banks, was huge and is a credit to Iceland.
    Iceland held the largest investigation in history of and economic and banking collapse whilst Luxembourg it’s enabler remained an arrogant COWARD, hiding behind closed doors, refusing investigations and yet proclaiming their VIRGINITY OF ALL FINANCIAL CRIMES IN LUXEMBOURG.
    Who has egg on their face today? NOT Iceland!
    The world respects a country which shows the courage to investigate it’s own failings and seeks to put a stop to them as best they can, with every means possible as they know that REPUTATION , TRUST and RESPECT, will always serve a country’s future best.

    The Icelandic banks did not simply fall prey to a global crisis as Luxembourg chants, as it blames Iceland for everything.

    Dr Jon DANIELSSON, London School of Economics, said that the
    scandal was UNIQUE in European financial Institutions.
    He said the root of Iceland’s problems started when the government decided to PRIVATISE the banks in the1990s.

    ICELAND WAS REGULATED BY THE E.U., but there was no PROPER SUPERVISION and Luxembourg was waiting with open arms for all those who wanted to take the highest risks possible with other people’s money and offered them every opportunity to do Behind-Closed-Doors deals using the opaque BCL and murky CLEARSTREAM to making the funds of many citizens VANISH into the hands of a few, whom Luxembourg protect as mafia protects it’s own, regardless of the crimes committed to innocent others.

    In the last weeks before the artificially delayed mass insolvencies Press Releases were informing the public that the positions of Landsbanki and Kauphting were very strong, that the banks were AAA and that they were increasing their staff in order to handle the business!
    Landsbanki even had a flash new office in Cannes, South of France, which was a window-dressing exercise to show how strong Landsbanki Luxembroug was and to attract the pensioners into one of the toxic Luxembourg schemes, supposedly opening in summer of 2008!
    The BCL gave billions to Iceland and the zealous administrator Yvette Hamilius who worked so closely with YVES MERSCH of the BCL Luxembourg Central bank, accommodating the rotten, abusive and ALREADY INSOLVENT IcelandIc banks such as Landsbanki, used the insolvent Landsbanki Luxembourg, to transfer funds in euros to Iceland.
    Yvette Hamilius and Yves Mersch were highly praised for their kind ‘help’ as they generously gave away other people’s money into Icelandic banks and bankers hands.
    Yvette Hamilius has also already re-inbursed the illegal loan the Luxembourg bank gave to the already insolvent Landsbanki Luxembourg.
    This loan from the BCL was abusive and against the advice of Claude Trichet.
    LUXEMBOURG encouraged Icelandic Banking Crime and it is essential that Europe recognises that today as Luxembourg continues to refuse any investigations which will reveal the extent of the false accounting Price Waterhouse Coopers and then Deloitte’s signed off and Yvette Hamilius, Karine Guillaume and Rosario Grasso are today REFUSING to denounce according to their professional duty within European law.
    Yvette Hamilius has signed off all the false accounting and false documents. She has stood as a barrier and barricade to all investigations for 6 years as she has refused to denounce the evidence the victims and their lawyers have put before her.

    This is SERIOUS and is a WAKE-UP call to the world.

    Rachael Williams

    24 Nov 14 at 9:10 am

  6. Sigrun, Can you remind us of the status of the Kaupthing prosecutions and appeals in Iceland?

    Tony Shearer

    24 Nov 14 at 10:53 am

  7. Hi Tony, the Kaupthing status is the following: the al Thani case, with heavy sentences in Reykjavík District Court, due at the Supreme Court late January. Three other cases are pending at RDC: market manipulation, lending to companies to influence the bank’s CDS and then embezzlement case, where charges were only brought in summer.

  8. Thanks Sigrun for the Kaupthing update. We count on you – as ever! – to keep us informed of future developments.

    Good to see Tony is still following this saga.


    25 Nov 14 at 12:44 pm

  9. PS The good news for KSFIOM depositors is that – just over 6 years on – we have now reached 100% recovery of our capital and are now hoping to eventually recover also some of the lost interest. This level of recovery makes it clear that KSFIOM was never truly insolvent, but was of course inevitably brought down by a loss of liquidity when the UK bank collapsed. For that we have suffered 6 years of anguish which we could well have done without and from which some will never recover. Thanks Kaupthing!


    25 Nov 14 at 12:52 pm

  10. Sigrun, Thank you for that.
    The Icelanders are really showing us how to go about things.
    UK regulation is all about filling in forms; the chairman of RBS has to apologise to the Treasury Select Committee because his people told lies. But how can he know the people who are at the sharp end of his bank? He can’t; it is too big to manage.
    We all know that banking and regulation is about the competence and values of people.
    Sadly the Chancellor and the senior people at the Treasury fail on both those counts.
    We have to follow what the Icelanders are doing.

    Tony Shearer

    29 Nov 14 at 4:59 pm

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