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Cyprus

Supreme Court sets precedent upholding CySEC fines in economy collapse

The Supreme Court

The Supreme Court on Wednesday rejected a judicial review case which was filed against the Cyprus Securities and Exchange Commission (CySEC) by the Financial Director of the defunct Cyprus Popular Bank, and concerned the imposition of an administrative fine amounting €100,000.

According to a CySEC announcement, the ruling is considered of crucial importance as it pertains to legal issues and factual matters concerning a critical period for the Cyprus economy, and the financial and banking sector, as it sets a precedent for pending similar cases.

In June 2014, CySEC slapped Bank of Cyprus and Laiki Bank, as well as senior former bank officers, with massive fines in excess of €7m in connection with their purchase of toxic Greek government bonds. Bank of Cyprus was fined €1,050,000 and (now-defunct) Laiki (Popular Bank) €950,000.

The administrative fines were imposed after CySEC concluded its investigation into the two banks’ purchase of Greek government bonds at a time when the bonds had undergone a series of downgrades, eventually reaching ‘junk’ rating.

The penalties also relate to the banks’ violation of reporting requirements to the stock exchange, publishing misleading and incomplete prospectuses and misreporting their assets in 2010 and 2011 up until the first write-down of Greek public debt, known as PSI.

In addition to the bank’s administrative fines, CySEC penalised a number of their officers. Among them, former Laiki strongman Andreas Vgenopoulos and former CEO Efthymios Bouloutas were each fined €705,000, and former deputy CEO Christos Stylianides was fined €430,000.

Former BoC chairman Theodoros Aristodemou and former CEO Andreas Eliades were each fined €530,000, while former Deputy Group Chief Executive Yiannis Kypri and former Executive Director Yiannis Pechlivanides were fined €330,000 each. Other directors were slapped with smaller five and six-figure fines.

CySEC said Wednesday’s Supreme Court ruling was the first of the series of ongoing appeals before the court with similar and/or identical legal and factual matters. The €100,000 concerned one of the fines imposed on the former Financial Director of Cyprus Popular Bank Annita Philippidou.

 

 

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