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FI slams Carnegie

Carnegie Investment Bank, one of Sweden's oldest and most respected investment banks, has been fined 50 million kronor by authorities and ordered to replace its CEO, chairman and many members of its board.

The action follows Carnegie’s admission that three traders exaggerated their own trading gains, something that resulted in the bank overstating profits by 200 million kronor. This led in turn to the bank’s staff being paid bonuses that were too high.

Finansinskpektionen (FI), the Swedish Financial Services Authority, said in a statement on Friday that Carnegie’s internal checks were insufficient and that its annual reports for 2005 and 2006 were incomplete.

“Governance of the operations has been contradictory and the bank’s internal rules have been incomplete. The control functions have been significantly undersized in relation to the scope and risk of the operations,” FI said.

FI said it would report the responsible auditors to the Supervisory Board of Public Accountants.

Carnegie came close to having its licence revoked, according to FI, but the presentation by the bank of an action plan meant that a warning and a fine were sufficient.

Carnegie’s CEO Stig Vilhelmsson resigned overnight, according to FI chief Ingrid Bonde. Other Carnegie officials being forced to quit include the chairman, Christer Zetterberg, and board members Hugo Andersen, Niclas Gabrán, Mai-Lill Ibsen, Anders Ljungh, Dag Sehlin and Fields Wicker-Muirin.

The 50 million kronor fine is the highest FI is able to impose.

Carnegie has already reported three staff to the police, accused of fraud. Prosecutors are currently evaluating the accusations.

Carnegie’s management had on Friday morning no immediate comment on the decision.

FINANSINSPEKTIONEN

Swedish real estate tycoon found dead

Swedish financier Maths O Sundqvist, whose risky deals led to the 2008 demise of the Carnegie investment bank, was found dead near an all-terrain vehicle in northern Sweden on Sunday morning.

Swedish real estate tycoon found dead

Police suspect Sundqvist was involved in an accident. When emergency services arrived, they found him lifeless and trapped under the vehicle.

Sundqvist launched his career by expanding and then selling his father’s bus company in the 1970s.

He later became part owner in several companies, including the Ländstidningen newspaper.

In 2007 Sundqvist was ranked one of Sweden’s richest men by the newspaper Veckans Affärer. He had at that time purchased blocks of shares primarily in Hexagon, Faberge, Industrivärden and SCA.

Sundqvist’s stock portfolio was worth 12 billion kronor ($1.8 billion) at the time. He also claimed to own properties worth a total of between 7 and 8 billion kronor.

In 2008, Sundqvist was at the centre of the collapse of the Carnegie investment bank, which fell into trouble following the eruption of the financial crisis in the autumn of 2008.

The Financial Supervision Authority (Finansinspektionen) revoked the bank’s licence because it had taken “exceptional risks” by lending large sums to an individual client – Maths O Sundqvist.

When forced to sell off the majority of his stocks, he suffered great financial losses.

At the time of his death, Sundqvist was 62-years-old.

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