Arion Bank and the Financial Supervisory Authority reach settlement

The Financial Supervisory Authority (FME) informed Arion Bank in April 2018 that it was looking into the Bank’s handling of conflicts of interest in respect of the Bank’s role in the financing of the United Silicon plant at Helguvík. The FME has now concluded its investigation by means of a settlement in which Arion Bank recognizes that it failed to keep a formal and systematic record of its analysis of conflicts of interest concerning the investment by pension funds in bonds in 2015 and their participation in share capital increases of Sameinað Sílikon hf. in 2016 and 2017. Matters of this nature may be brought to a conclusion by means of settlement as it does not constitute a serious offence, and Arion Bank has agreed to pay a fine of ISK 21 million.

Arion Bank had a multifaceted role in raising capital for the development of the silicon plant which unavoidably resulted in conflicts of interest. The Bank informed its clients of its roles and ensured that appropriate countermeasures were in place to prevent any conflict of interest from harming the interests of clients. No criticisms were made of the Bank’s analysis of conflicts of interest nor of the countermeasures taken by the Bank, but as stated in the settlement, the Bank failed to document its analysis of conflicts of interest and the Bank has already responded to this oversight and improved its internal process for recording conflicts of interest.