Cyprus's Securities and Exchange Commission (SEC) on Thursday imposed huge fines on two Cypriot banks and several ex-members of their Boards and executive officials for providing misleading information and manipulating information over their investment in Greek bonds.
Fines on Bank of Cyprus and 12 of its top ex-officials amounted to 3,520,000 euros (about 4,787,200 U.S. dollars) while fines on defunct Cyprus Popular Bank, known as Laiki and 12 of its top ex-officials totaled 4,065,000 euros.
Some of them were fined for falsely alleging that they had got rid of Greek bonds whereas the banks still held huge amounts of Greek debt which they purchased at a time when the Greek ratings were continuously downgraded.
A large portion of the Greek debt was purchased from European banks which were unloading Greek bonds in panic selling.
The impairment of the Greek bonds in 2012 as part of an EU/IMF rescue package to Greece caused Cypriot banks to lose 4.5 billion euros, dragging down the economy of the eastern Mediterranean island.
The big loss of the banks and their failure to raise capital from private sources ultimately forced Cyprus itself to apply for a 10-billion-euro bailout, which involved an unprecedented haircut of deposits over 100,000 euros to recapitalize Bank of Cyprus.
Laiki was wound down under the burden of a huge debt to the European Central Bank which amounted to near two thirds of Cyprus's 17.5 billion euro annual economy. It assets were absorbed by Bank of Cyprus.
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