The supreme court on Wednesday said market manipulation cannot stand as a charge for four defendants in a case against Bank of Cyprus (BoC) relating to its alleged mismanagement in the run up to Cyprus’ financial collapse, thereby annulling an earlier Nicosia criminal court decision
The case concerns the acquisition of Greek government bonds and the lender’s failure to inform its shareholders of the risks of such an investment, which eventually cost BoC billions in losses.
The petition for certiorari – under which a higher court reviews a case tried in a lower court – was filed by BoC as a legal entity, former vice chairman Andreas Artemi, and non executive board members Giorgos Georgiades and Costas Severis.
Defendants in the case are also former CEOs Andreas Eliades, Yiannis Kypri and non executive board member Costas Hadjipapas.
The supreme court’s decision on Wednesday determined that market manipulation could not be a charge and thus annulled the interim decision taken by Nicosia criminal court on April 7 this year, which dismissed objections raised by the defence team over the charge sheet.
Reading out the decision, supreme court judge Yiasemis Yiasemi said that although Article 19 outlines “it is forbidden that a natural or legal entity manipulates the market” this is a statement prohibiting the specific act but does not in it of itself “create a criminal offence”.
The market manipulation charge on the charge sheet was based on a 2005 directive of the Cyprus securities and exchange commission (Cysec) which is no longer valid, the defence argued.
The supreme court’s decision agreed with the defence adding that the criminal court had failed to establish the regulatory administrative act 445/2005 on which the directive was based, and was “illegal and invalid from the onset.”
The contested charge sheet included a total of six charges, four of which concerned market manipulation. BoC faced all four, Kypri faced two, while Artemi, Georgiades, Severi and Hadjipapa faced one.
Eliades faced four market manipulation charges and two charges of perjury in connection with his testimony before an investigating committee that probed the collapse of the economy.
All defendants denied the charges.
The case in criminal court had been postponed until supreme court’s ruling. The case is expected to resume on December 18, however Cybc cited sources saying the legal services were planning to appeal Wednesday’s decision.