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26 bankers already sentenced to a combined 74 years in prison

icelandmag.visir.is | November 3, 2015

In two separate rulings last week, the Supreme Court of Iceland and the Reykjavík District Court sentenced three top managers of Landsbankinn and two top managers of Kaupþing, along with one prominent investor, to prison for crimes committed in the lead-up to the financial collapse of 2008. With these rulings the number of bankers and financiers who have been sentenced to prison for crimes relating to the financial collapse has reached 26, and a combined prison time of 74 years.

Former managers of Kaupþing top the list

Eleven former bankers have been sentenced to four and a half years or more in prison. The former top bosses of Kaupþing have received the longest sentences to date. Hreiðar Már Sigurðsson, the former CEO of failed bank Kaupþing and Magnús Guðmundsson, the CEO of Kaupþing Luxembourg, top the list, having been sentenced to a combined six years in prison for extensive market manipulation, embezzlement and breach of fiduciary duties. The maximum combined sentence for financial crimes according to Icelandic law is six years.

Courts can sentence people to longer prison terms than six years in cases where the crimes are systematic and repeated, and in cases where people make a living from engaging in financial crimes. Future cases against Magnús and Hreiðar Már will determine if the courts consider the two to have engaged in financial criminality of a scale which justifies expanding on the maximum sentences.

Market manipulation and embezzlement involving bankers and corporate Vikings

In addition to Hreiðar Már and Magnús eight other individuals with connections to Kaupþing have been sentenced to prison. Sigurður Einarsson, the Chairman of Kaupþing has been sentenced to a combined prison term of five years in two cases involving market manipulation in the lead up to the 2008 crisis, while the Reykjavík District court sentenced Ingólfur Helgason the CEO of Kaupþing’s domestic division to four and a half years and Bjarki Diego, managing director of the bank’s loan division to two years, both for market manipulation. Three others received suspended sentences.

Two financiers with ties to KAupþing have also been sentenced. Ólafur Ólafsson, one of the most powerful “corporate Vikings” of the pre-2008 years and one of the largest shareholders in Kaupþing was sentenced to four and a half years for market manipulation by the Supreme Court while Skúli Þorvaldsson, a prominent investor was sentenced to six months in prison by the District Court for cover-up in a case involving the embezzlement of bank funds by the CEOs of Kaupþing and Kaupþing Luxembourg, Hreiðar Már and Magnús.

Former Landsbankinn bosses guilty of market manipulation

The Special Prosecutor for financial crimes has also charged former employees and top managers of the two other big Icelandic banks, Landsbankinn and Glitnir, for various crimes, including market manipulation.

Last week the Supreme Court of Iceland found Sigurjón Þ. Árnason, the former CEO of Landsbankinn guilty of market manipulation, sentencing him to three and a half years in prison, as well as Elín Sigfúsdóttir, the former director of corporate lending, was sentenced to one and a half years and Steinþór Gunnarsson, head of brokerage to nine months. In a second market manipulation case against Landsbankinn bosses, which is headed to the Supreme Court, Sigurjón, Ívar Guðjónsson the head of proprietary trading along with a brokerJúlíus Steinar Heiðarsson, were all sentenced to three months in prison by the District court.

CEO of Glitnir, the smallest bank acquitted

Lárus Welding, the former CEO of Glitnir has been acquitted by the Supreme Court in one case involving breach of fiduciary duty and fraudulent loans, while another case awaits retrial by the District Court. Jón Ásgeir Jóhannesson, one of the most illustrious corporate vikings and the largest shareholder in Glitnir, is also awaiting retrial for fraudulent loans in the same case, along with several top Glitnir bosses.

Four former employees of Glitnir have been sentenced by the District Court to five years in prison for market manipulation and breach of fiduciary duty.

Several others have been sentenced or await trial

In addition to the bosses of the three largest banks several other financiers and bankers have been sentenced by the Supreme Court or the Reykjavík District Court for crimes in the lead up to the 2008 financial crisis. The most prominent of these was Baldur Guðlaugsson, the former permanent secretary of Ministry of Finance, who was sentenced to two years in prison for insider trading in 2012.

Supreme Court vs the Reykjavík District Court

To date the Supreme Court has ruled in eight cases. The court has handed down guilty verdicts in six of these cases, acquitted the defendants in one and referred one case back to the District Court of Reykjavík. Several cases are now making their way from the District Court to the Supreme Court. Judging by the previous rulings of the Supreme Court most observers believe the court will either uphold guilty verdicts and hand down more severe sentences or overturn acquittals.

Sentences handed down by the Supreme Court

February 2012
Baldur Guðlaugsson, former Permanent Secretary of the Ministery of Finance: two and a half years for insider trading.

June 2012
Ragnar Z. Guðjónsson, former CEO of Byr, a Savings and Loan: four and a half years and Jón Þorsteinn Jónsson, former chairman of Byr: four and a half years for breach of fiduciary duty and fraudulent loans in the “Exeter case”

October 2013
Styrmir Þór Bragason, former CEO of MP bank: one year for money laundering and participation in the arrangement of fraudulent loans from S&L Byr in the Exeter case (see above).

December 2013
Friðfinnur Ragnar Sigurðsson, former director of interbank markets at Glitnir: fifteen months for insider trading.

March 2014
Lýður Ágústsson, former chairman of investment company Exista, one of the largest shareholders of Kaupthing: eight months and Bjarnfreður Ólafsson, former board member of Kaupþing: six months for lying to authorities and misleading markets.

February 2014
Lárus Welding, former CEO of Glitnir, Guðmundur Hjaltason, former head of corporate finance at Glitnir, Karl and Steingrímur Wernersson, brothers, prominent Corporate Vikings and owners of investment company Milestone were all acquitted of having arranged a fraudulent loan to investment company Milestone.

February 2015
Hreiðar Már Sigurðsson, CEO of Kaupþing: five and a half years, Sigurður Einarsson chairman of Kaupþing: 4 years, Magnús Guðmundsson, CEO of Kaupþing Luxembourg: four and a half years and Ólafur Ólafsson, prominent Corporate Viking and one of the largest shareholders of Kaupthing: four and a half years for market manipulation

October 2015
Sigurjón Þ. Árnason former CEO of Landsbankinn: three years, Elín Sigfúsdóttir former director of corporate lending: one and a half years and Steinþór Gunnarsson, former director of brokerage: nine months for market manipulation.

Reykjavík District Court rulings appealed to the Supreme Court

June 2014
Birkir Kristinsson, former head of private banking at Glitnir: Five years, Jóhannes Baldursson, managing director of capital markets at Glitnir: Five years, Magnús Arnar Arngrímsson the managing director of corporate finance at Glitnir: Five years, Elmar Svavarsson: stockbroker at Glitnir, Four years for market manipulation and fraudulent loans to holding companies which speculated in the bank’s shares.

June 2014
Jón Ásgeir Jóhannesson, prominent Corporate Viking, largest shareholder of Glitnir, Lárus Welding, former CEO of Glitnir, Magnús Arnar Arngrímsson, the managing director of corporate finance at Glitnir: Acquitted and Bjarni Jóhanesson, former account manager at Glitnir: all acquitted of breach of fiduciary duties and arrangement of fraudulent loans.

November 2014
Sigurjón Árnason, former CEO of Landsbankinn: three months, Ívar Guðjónsson, former director of proprietary trading at Landsbankinn: three months, Júlíus S. Heiðarsson, broker in proprietary trading at Landsbankinn: three months and Sindri Sveinsson, broker in proprietary trading at Landsbankinn: Acquitted of charges of market manipulation,

October 2014
Sigurjón Árnason, former CEO of Landsbankinn: Elín Sigfúsdóttir, former managing director of corporate finance: both acquitted of having arranging fraudulent loans to shell companies in Panama which purchased shares in Landsbankinn.

December 2014
Karl and Steingrímur Wernersson, brothers, prominent Corporate Vikings and owners of Investment company Milestone, Guðmundur Ólafsson, former managing director of Milestone and three accountants at KPMG all acquitted of breach of fiduciary duties and arrangement of fraudulent loans.

Ferbruary 2015
Hannes Smárason, prominent corporate viking and former CEO of investment company FL Group: acquitted of charges of embezzling three billion ISK from FL Group in 2007.

October 2015
Hreiðar Már Sigurðsson, former CEO of Kaupþing: six months, Magnús Guðmundsson former CEO of Kaupþing Luxembourg: one and a half years for embezzlement and investor Skúli Þorvaldsson: six months for cover-up. Guðný Arna Sveinsdóttir, CFO of Kaupþing: acquitted.


Nancy Duffy McCarron, CBN 164780
Attorney, Real Estate Broker, BBB Arbitrator, CA Notary Public
Certified Forensic Loan Auditor, Property Manager


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