Tuesday

22nd Aug 2017

Rate-fixing bankers to face jail under new EU rules

Bankers caught manipulating the Libor exchange rate could face a minimum five-year jail term under new EU legislation.

The provisions included in the proposed market abuse law were adopted by 39 votes to 0 with a single abstention in a vote by the parliament's economic and monetary affairs committee on Monday (9 October).

Thank you for reading EUobserver!

Subscribe now and get 40% off for an annual subscription. Sale ends soon.

  1. €90 per year. Use discount code EUOBS40%
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

Arlene McCarthy, the centre-left MEP piloting the bill through parliament, described the move as "a key step along the road to reforming the financial sector."

MEPs will now seek a swift deal with EU government ministers by Christmas, with a view to implementing the legislation in 2013.

For her part, McCarthy said: "The Libor scandal has demonstrated that the culture in the financial sector has not changed and that they cannot be trusted to self-regulate."

Sven Giegold, the finance spokesman for the Green group, said that the sanctions would act as "compelling deterrents against these unethical financial practices."

However, member states are thought to be uneasy about setting minimum jail terms at EU level.

The inclusion of criminal sanctions for interest rate fixing and manipulating other financial benchmarks had been announced by internal market commissioner Michel Barnier in July.

But the European Ccommission had steered clear of setting sanction levels, with justice commissioner Viviane Reding claiming that the EU treaties only allow European law-makers to agree on definitions of criminal conduct rather than sanctions themselves.

The move was provoked by the Libor rate-fixing scandal which made headlines over the summer, with a string of major banks in the US and the EU implicated in keeping the rate artificially high.

Libor, the interest rate at which banks lend to each other, determines the price of an estimated $800 trillion worth of financial instruments.

So far, regulators in Europe and the US are determining financial sanctions to be imposed on the banks involved.

The scandal also saw the resignation of Barclay's boss Bob Diamond after the British banking giant was fined £280 million for its involvement.

Prior to the MEPs' vote, an opinion poll by YouGov on behalf of campaign group Avaaz revealed that 89 percent of Europeans wanted to see financiers who commit fraud or manipulate markets face criminal sanctions.

The poll sampled 3,700 people in Germany, France and the UK. Avaaz also presented MEPs with a petition demanding sanctions signed by 720,000 Europeans.

The survey indicated public perception that governments enjoyed a cosy relationship with big banks.

Two thirds of Britons and Germans claimed that governments mainly listened to the banking giants when drawing up financial regulation.

The poll also revealed divided public opinion as to whether criminal sanctions should be established at national or EU level.

Only 41 percent of Britons agreed that common legal rules for criminal sanctions should be established at EU level, with 48 percent saying that the issue should be left to individual countries. Meanwhile, a majority of French and German respondents backed EU-level rules.

'Killer robots' are not about Terminator

A European signatory of an open letter about autonomous weapons says the imagery of fictional killer robots is distracting from a seriously dangerous issue.

Opinion

Macron goes east to test appetites for EU integration

The next few months will be decisive in selecting who stays in the core of the EU and who stays behind, writes Tomas Prouza, a former state secretary for European Affairs of the Czech Republic.

News in Brief

  1. Austria has begun checks at Italian border
  2. Slovenian PM: Brexit talks will take longer than expected
  3. Merkel backs diesel while report warns of economic harm
  4. UK to publish new Brexit papers this week
  5. Macedonia sacks top prosecutor over wiretap scandal
  6. ECB concerned stronger euro could derail economic recovery
  7. Mixed Irish reactions to post-Brexit border proposal
  8. European Union returns to 2 percent growth

Stakeholders' Highlights

  1. European Jewish CongressEuropean Governments Must Take Stronger Action Against Terrorism
  2. European Healthy Lifestyle AllianceDoes Genetics Explain Why So Few of Us Have an Ideal Cardiovascular Health?
  3. EU2017EEFuture-Themed Digital Painting Competition Welcomes Artists - Deadline 31 Aug
  4. ACCABusinesses Must Grip Ethics and Trust in the Digital Age
  5. European Jewish CongressEJC Welcomes European Court of Justice's Decision to Keep Hamas on Terror List
  6. UNICEFReport: Children on the Move From Africa Do Not First Aim to Go to Europe
  7. Centre Maurits CoppietersWe Need Democratic and Transparent Free Trade Agreements Says MEP Jordi Solé
  8. Counter BalanceOut for Summer, Ep. 2: EIB Promoting Development in Egypt - At What Cost?
  9. EU2017EELocal Leaders Push for Local and Regional Targets to Address Climate Change
  10. European Healthy Lifestyle AllianceMore Women Than Men Have Died From Heart Disease in Past 30 Years
  11. European Jewish CongressJean-Marie Le Pen Faces Trial for Oven Comments About Jewish Singer
  12. ACCAAnnounces Belt & Road Research at Shanghai Conference