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FME cases involving sanctions since the beginning of this year

14.8.2009

Investigations into possible violations of laws regulating the financial market are a large part of the FME operations. If a violation is considered to have taken place, such cases can be concluded by administrative sanctions, settlement or referral to the prosecuting authorities. Following is an overview of the cases involving sanctions, which the FME has completed since the beginning of this year.

Cases which have been referred to the Office of the Special Prosecutor
The Office of the Special Prosecutor was established by a special law and the Special Prosecutor took office on 1 February 2009. The office is charged with investigating suspicion of punishable conduct in the run-up to, and in connections with, the events that led to the passing of the so-called emergency law in October 2008, and as appropriate, with following up investigations through the issuing of indictments and prosecution. The office replaces the Economic Crime Department of the National Commissioner of Police, which in normal circumstances is responsible for investigating criminal cases involving the financial market.

In mid October 2008 the FME started to investigate whether the laws which are subject to FME supervision had been broken in the run-up to, and wake of, the collapse of the three commercial banks. Investigations have dealt with i.a. insider trading, foreign exchange transactions, marketing and investments of money market funds, market manipulation and loan procedures. The FME has now referred 20 cases to the Office of the Special Prosecutor. There is good cooperation between the FME and the Office of the Special Prosecutor regarding the investigation of cases.

Cases referred to the Economic Crime Department of the National Commissioner of Police
In 2009 the FME has referred one case to the Economic Crime Department of the National Commissioner of Police. Additionally, the FME and the National Commissioner of Police have cooperated on the investigation of another case.

Imposition of administrative fines
Experience shows that punishment in the form of penal fines or imprisonment has limited value in cases of violations on the financial market. In practice, it is not possible to officially investigate and instigate criminal proceedings of all such violations due to their number and the cost associated with the investigation, indictment and court proceedings. Therefore, the FME has extensive authorization to use administrative fines.

The FME has imposed administrative fines on five parties since the beginning of this year. The fines were between 1,000,000-10,000,000 ISK.

Settlement
Much time and resources are spent on fulfilling the demands of administrative law regarding the preparation and publication of administrative decisions, irrespective of whether there is a material disagreement between the FME and the party to the case.  The FME is therefore authorized to conclude a case with a settlement, if the party has violated legal provisions which authorize the FME to impose administrative fines. However, this authorization does not cover major violations which are subject to punitive sanctions.

The FME has concluded 40 cases this year with a settlement. Thereof, 36 settlements involve issuers of securities which have been admitted to trading on a regulated market, who have not fulfilled their obligation to inform the FME regularly of insiders and connected parties.

  FME cases involving sanctions since the beginning of this year

 Referred to the special prosecutor  20
 Referred to the economic crimes department  1
 Referred to  the state prosecutor  5
 Administrative fines  5
 Settlements  40
 Total  71


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