Saturday

3rd Dec 2016

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).

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

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.

Interview

Polish government in bid to defund NGOs

Ruling Law and Justice has promised to overhaul the NGO sector. The move could strain relations with Norway, a major donor to Polish civic life.

Column / Brexit Briefing

Davis brings Brexit back to reality

Brexiteers will be shocked to hear the government is considering slaughtering the sacred cow, offering up contributions to the EU budget in exchange for market access.

News in Brief

  1. Talks on wholesale roaming rules to start
  2. Lead MEP Dieselgate committee: Italy and Slovakia will cooperate
  3. Transparency NGO sues EU commission on Turkey deal
  4. Pro-EU liberal wins UK by-election
  5. Finnish support for Nato drops, Russia-scepticism grows
  6. Cyprus talks to resume in January
  7. Documents from German NSA inquiry released
  8. Transport commissioner 'not aware' of legal action on emissions

Stakeholders' Highlights

  1. European Gaming & Betting AssociationContinues to Grow its Membership and Welcomes its Newest Member Association
  2. ACCASupports the Women of Europe Awards, Celebrating the Women who are Building Europe
  3. European Heart NetworkWhat About our Kids? Protect Children From Unhealthy Food and Drink Marketing
  4. ECR GroupRestoring Trust and Confidence in the European Parliament
  5. UNICEFChild Rights Agencies Call on EU to put Refugee and Migrant Children First
  6. MIRAIA New Vision on Clean Tech: Balancing Energy Efficiency, Climate Change and Costs
  7. World VisionChildren Cannot Wait! 7 Priority Actions to Protect all Refugee and Migrant Children
  8. ANCI LazioRegio-Mob Project Delivers Analysis of Trasport and Mobility in Rome
  9. SDG Watch EuropeCivil Society Disappointed by the Commission's Plans for Sustainable Development Goals
  10. PLATO15 Fully-Funded PhD Positions Open – The Post-Crisis Legitimacy of the EU (PLATO)
  11. Access NowTell the EU Council: Protect our Rights to Privacy and Security
  12. ACCAThe Future of Audit Means Adaption to Today’s Global and Digital World