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Iceland: Update: Supreme Court Increases Jail Sentence for Kaupthing Bank Director and Shareholder

(July 2, 2015) On February 12, 2015, the Icelandic Supreme Court decided the Al-Thani Case, in which the Chief Executive of Kaupthing Bank, the CEO of its Luxembourg branch, the Chairman of the Board, and the bank’s largest shareholder were charged with market manipulation. (Iceland Jails Kaupthing Bankers for Market Manipulation, NEW YORK TIMES (Feb. 13, 2015).)

The men were part of a scheme in which Sheikh Mohammed Bin Khalifa Bin Hamad Al Thani of Qatar made a 5% share purchase in the Kaupthing Bank with money borrowed from the bank itself. (Peter Roudik, Iceland: Icelandic Bankers Jailed for Fraud, GLOBAL LEGAL MONITOR (July 30, 2014).)

The Supreme Court upheld the lower court’s ruling and increased the prison sentences for both the majority shareholder and the Luxembourg branch CEO. The former Chairman of the Board received a reduced sentence of imprisonment, from five years to four, as did the former Kaupting Bank Chief Executive, whose term of five and a half years in prison is still the longest in the group. (Iceland Jails Kaupthing Bankers for Market Manipulation, supra.)

In addition to the prison sentences, the four must pay substantial fines, ranging from between ISK14 million (about US$106,000) to ISK24.7 million (about US$187,000). The CEO received the heaviest fine, a penalty of US$187,000 (Kaupthing Four Receive Prison Sentence, ICELAND MONITOR (Feb. 12, 2015).)

The sentences have not yet begun to be served, because three of the four men await trial for their involvement in a second case. (Epic Kaupthing Abuse Trial Begins, ICELAND MONITOR (Apr. 20, 2015).) A verdict in this case, for which Supreme Court proceedings started on April 20, is expected later this year. (Id.)