Bloomberg News

EU Clinches Deal on Jail Terms for Punishing Market Riggers

December 20, 2013

EU Financial Services Chief Michel Barnier

Michel Barnier, the EU’s financial services chief, has cited the rigging as one reason why the bloc should toughen its sanctions against market abuse. Photographer: Jock Fistick/Bloomberg

European Union lawmakers clinched a deal on jail sentences for market manipulation and insider dealing, giving judges the power to send the worst offenders to prison for at least four years.

Nations would also be obliged to ensure that their longest available prison sentences for improper disclosure of information are at least two years, according to a statement on the deal published by the European Parliament.

“The deal reached today is a major step forward in ensuring market abuse is tackled across the EU,” Arlene McCarthy, the EU parliament’s lead lawmaker on the file, said in the statement.

EU regulators fined six companies a record 1.7 billion euros ($2.3 billion) this month for rigging interest rates linked to the London Interbank Offered Rate, or Libor, taking global fines linked to the scandal to more than $6 billion.

“The Libor scandal was market manipulation of the worst kind. We are seeing more alleged and potential manipulation of benchmarks in energy markets such as oil and gas and foreign exchange markets,” McCarthy said.

Michel Barnier, the EU’s financial services chief, has cited the rigging as one reason why the bloc should toughen its sanctions against market abuse. Barnier proposed measures in 2011 to stiffen minimum penalties, with the goal of closing loopholes in national laws.

“This is great news for investors and an unwelcome Christmas present for white-collar criminals,” Barnier said in an e-mailed statement. “Offenders found guilty of market abuse will finally face jail across the European Union.”

Today’s deal on Barnier’s proposals was reached by the parliament and by national governments.

The accord complements an agreement on minimum administrative sanctions for punishing market abuse that was brokered earlier this year.

To contact the reporter on this story: Jim Brunsden in Brussels at jbrunsden@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net


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