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MEPs vote for tougher EU-wide sanctions for market fraud

09 October 2012, 20:57 CET

(BRUSSELS) - European lawmakers on Tuesday voted in favour of slapping tough EU-wide criminal sanctions on financial wrongdoing, with maximum terms of at least five years for the most serious cases of insider dealing and market manipulation.

The European Parliament's economic and monetary committee agreed the rules by 39 votes in favour to none against and one abstention.

"The EU cannot be seen to be the soft option or a safe haven for perpetrators of market abuse," said Britain Arlene McCarthy, a member of the Socialist group.

"That is why for the first time we are introducing EU-wide criminal sanctions. The Libor scandal has demonstrated that the culture in the financial sector has not changed and that they cannot be trusted to self-regulate."

She referred to the discovery of rate-rigging in the London-based Libor interbank interest rate that has shocked global financial markets.

There are currently wide differences between member states on the definition of offences as well as the penalties, opening up the possibility of carrying out fraud across borders and where sanctions are softest.

At present, the maximum sentences for insider trading for example vary from 30 days in Estonia to 12 years in Italy and Slovakia. Maximum terms for market manipulation currently range from 30 days in Estonia to 15 years in Slovakia.

To iron out the differences, MEPs want to oblige all member states to ensure that maximum jail sentences for the most serious forms of insider dealing or market manipulation are at least five years throughout the EU.

Earlier Tuesday, a YouGov/Avaaz opinion poll showed 90 percent of people in France and 89 percent in Britain and Germany believed bankers responsible for fraud or manipulating markets should face criminal sanctions such as jail sentences.

Avaaz handed a petition to parliament signed by over 720,000 people calling for such sanctions.

Alex Wilks, campaign director at Avaaz, said: "People across Europe want to see bankers behind bars. They are massively rewarded for their reckless gambles and get off far too lightly when caught."

Further information, European Parliament

Legislative Observatory File for the Regulation

Legislative Observatory File for the Directive


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