News for listed companies: The Disciplinary Committee of the NASDAQ OMX Stockholm fines Kaupthing Bank Sverige AB (8/09)

Kaupthing Bank Sverige AB has acted in breach of NASDAQ OMX Stockholm’s rules by executing a trade on behalf of a customer at a price that deviated significantly from the current market value of the particular share. Accordingly, NASDAQ OMX Stockholm’s Disciplinary Committee has ruled that Kaupthing Stockholm AB must pay a fine of SEK 400,000, and has issued a warning to the broker who had executed the trade.

Kaupthing Bank Sverige AB is a member of OMX Nordic Exchange Stockholm AB (“the Exchange”). Membership is governed by the Norex Member Rules (NMR). According to these rules, the party who places an order or who executes a trade in the Exchange’s trading system must do so in a manner that ensures that the order or the trade reflects the current market value of the share in question. In establishing the current market value, such considerations as changes in the price of the share during the particular trading day and preceding trading days must be taken into account (NMR Item 4.6.1). It is stated specifically that placing orders or completing trades with the intention of changing the value of the instrument at a given point in time, such as the end of a year, is prohibited (NMR 4.6.2).

On December 30, 2008 (the final day of trading during the year) Kaupthing – between 5:11 and 5:17 p.m. – executed trades pertaining to a total of 2,100 shares in eWork Scandinavia AB, a company whose shares are traded on First North. The trades led to the price of the share rising from SEK 19 to SEK 24.80, equal to a price deviation of about 30 percent. Since there were no further trades in the share, SEK 24.80 was quoted as the closing price for the year end. From the recorded call between the customer and the broker that preceded the trades, it is apparent that the customer wished to “boost the price” and that, preferably, he would have liked the price to have ended up at SEK 27.40.

The Disciplinary Committee finds that it is beyond all doubt that the broker and thus also Kaupthing contravened NMR Item 4.6.1 in a manner that cannot be regarded as minor or excusable. However, based on the investigation at hand, the Committee does not consider it possible to state an opinion on whether the customer had premeditatedly attempted to affect the price formation in an improper manner. 

The Disciplinary Committee fines Kaupthing Bank Sverige AB four hundred thousand Swedish kronor (400,000) and issues a warning to the broker. 

Supreme Court Justice Johan Munck, Supreme Court Justice Marianne Lundius, Professor Madeleine Leijonhufvud, Company Director Hans Mertzig and Company Director Stefan Erneholm participated in the Committee’s deliberations.

For more information
Joakim Strid, Head of Trading Surveillance	08 - 405 70 30.