In the ongoing Bank of Cyprus trial, the Nicosia Criminal court on Tuesday issued an interim ruling, where it approved the defence’s motion for a Supreme Court referral of the legality of a Cyprus Securities and Exchange Commission (CySEC) regulation, on which rests the market-manipulation charge.
During a previous hearing, defence attorney Polis Poliviou had submitted a request for the Supreme Court to rule on his view that the regulation in question was approved in 2011 by the CySEC board, the appointment of which was deemed unlawful by the Supreme Court. Consequently, the board was dismissed and replaced in March 2012 by the cabinet.
The new CySEC board approved the regulation again, but with no retroactive scope, Poliviou argued, therefore the statute is legally invalid.
The statute being challenged is Regulatory Administrative Act 406/2011.
The next hearing in the trial was set for July 15.
All six defendants – Bank of Cyprus, former board chairmen Theodoros Aristodemou and Andreas Artemi, former CEOs Andreas Eliades and Yiannis Kypri, and former deputy CEO Yiannis Pehlivanides – are facing the market-manipulation charge in connection with their failure to inform the public from June 14 to June 26, 2012, that the lender’s capital shortfall, announced the previous month at €200 million, was in fact more than double that.
The bank, Aristodemou, and Eliades, are also facing a charge of having misrepresented the value of the lender’s financial holdings to shareholders at their annual general meeting (AGM) on June 19, 2012.
Aristodemou and Eliades also face an additional charge, again relating to the AGM. They are accused of having withheld crucial information regarding the bank’s capital shortfall from the shareholders.
The court has already ruled that a ‘prima facie’ case exists against the defendants.
But should the CySEC regulation be deemed legally void, three of the defendants – Artemi, Pehlivanides and Kypri, who face only the charge of market manipulation – would walk.
As the court noted, in the event the market manipulation charge is dismissed, that would have a major bearing on the trial proceedings as it would “eliminate the possibility of one or more of these defendants [Artemi, Pehlivanides, and Kypri] providing sworn testimony that could be used against another defendant.”
“We deem that resolving the legal issue that has been posed will be crucial and decisive to these proceedings,” the Nicosia Criminal court said in its interim ruling.