The National Commissioner of the Icelandic Police’s economic crime department is investigating four cases related to board members and connected individuals selling shares in savings bank SPRON in the summer of 2007 on suspicion of insider trading.

Photo by Páll Strefánsson.

An investigation into this case had already been launched by the department on an earlier occasion but it was canceled as the Financial Supervisory Authority didn’t believe at the time that the trade had been unlawful, visir.is reports.

The current investigation includes the case of Gunnar Thór Gíslason, a former board member of SPRON, who sold shares for more than ISK 1 billion (USD 7.8 million, EUR 5.7 million), among other individuals.

Business weekly Vidskiptabladid reported yesterday [04.02.10] that the buyers of these shares had asked their lawyers to look into the events leading up to the sale.

The board of SPRON decided during a meeting on July 17, 2007 to register the savings bank on the stock market in the coming autumn.

After the meeting, the market on trade with shares in SPRON was open for more than a month and during that time shares in SPRON were sold for more than ISK 4 billion (USD 31 million, EUR 23 million)—many times their actual value.

In fact, a price bubble was created which burst in the autumn when SPRON was registered to the stock market.

The buyers of these shares have suffered extensive losses and are left with valueless shares and debts—in some cases they were provided with loans from SPRON to purchase stock in the bank itself.

Among sellers of shares were three SPRON board members, the wife of the savings bank’s director, a daughter of a board member and SPRON employees. The buyers were unaware of their identity at the time of the acquisition.

Well-known politicians were also among sellers, including current Foreign Minister Össur Skarphédinsson of the Social Democrats, who was minister of industry at the time, who sold all of his shares in SPRON at par value ISK 10 million (USD 78,000, EUR 57,000).

Skarphédinsson told visir.is that he had sold his shares for ISK 62 million (USD 481,000, EUR 351,000) and made ISK 30 million (USD 233,000, EUR 170,000) in profits. He claimed there had not been anything unnatural about this trade and that he had not had any insider information.

Árni Thór Sigurdsson, an MP of the Left-Greens, was also among sellers. He sold shares at a par value of almost ISK 1.3 million (USD 10,000, EUR 7,000) and received between ISK 5.2 and 9 million (USD 40,000 and 67,000, EUR 29,000 and 51,000) for the shares compared to the market price of that time. He also denies having had access to insider information.

The cases of these politicians are not under investigation by the economic crime department, visir.is stated.