Criminal Proceedings in the Wake of the Icelandic Banking Crisis

Eyvindur G. Gunnarsson, Stefán Már Stefánsson

Research output: Contribution to journalArticlepeer-review


Iceland was hit hard by the financial crisis in 2008. This article discusses the criminal case law handed down in Iceland following the collapse of the Icelandic banks in October 2008. As a result of the banking failure, important legislative measures were taken. A new office of a Special Prosecutor was established by law to deal with potential economic crimes committed during the years leading up to the collapse. The extreme nature of the banking failure paved the way for criminal proceedings. Moreover, as the banks had collapsed, they were not bailed out by the State. Rather, new banks were established under new management. This facilitated investigation. Three main categories of criminal behaviour have led to charges: insider fraud, market manipulation, and criminal breach of trust. The Supreme Court has pointed out that although the information might not, on its own, be held to make a significant difference for a reasonable investor, it may, when put in the context of a mosaic of other information, be deemed to have a significant impact on the share price. Market manipulation mostly concerned systematic manipulation of the share price of each of the banks, rather than a single event of manipulation. Reckless lending can be classified as criminal breach of trust. Criminal breach of trust was often the result of market manipulation, as banksʼ funds were put at enormous risk in order to finance the purchase of their own shares by lending to borrowers whose only substantial asset was often these same shares.

Original languageEnglish
Pages (from-to)415-451
Number of pages37
JournalEuropean Business Organization Law Review
Issue number2
Publication statusPublished - 1 Jun 2020

Bibliographical note

Publisher Copyright:
© 2019, T.M.C. Asser Press.

Other keywords

  • Criminal breach of trust
  • Criminal proceedings
  • EU/EEA law
  • Financial crisis
  • Insider fraud
  • Market manipulation


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