The Estonian Supreme Court on Friday upheld the conviction of Karoly Kirber, former trader for SEB, and Toomas Tool, major owner of the property developing company Arco Vara, for market manipulation related to trading in Arco Vara shares.
Estonia's top court upholds market manipulation verdict against Toomas Tool
20th May 2013, 17:07
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The Supreme Court's criminal college however annulled the part of the circuit court's verdict that concerns pecuniary punishment for Tool and sent it back to the circuit court, spokespeople for the Supreme Court said.
The Supreme Court found shortcomings in imposing of the punishment on Tool. The circuit court handed down to Tool a monetary punishment of 250 daily rates, in addition increasing the daily rate taking into consideration Tool's income.
The Supreme Court said it cannot be established in the circuit court's decision which facts the court deemed as proven in imposing the increased daily rate and what specific evidence and why the the court relied on. According to the Supreme Court, in establishing the daily rate the circuit court failed to determine even the approximate composition of Tool's assets and paid no attention to the liabilities related to the assets and the rights of third persons that affect the value of the assets.
A court judgment in Tool's case was last passed at the end of October 2012 when the circuit court satisfied an appeal of the North Regional Prosecutor's Office and gave to Tool a monetary punishment of 250 daily rates. Since according to the court Tool's income amounts to up to 2,000 euros a day, the punishment would have totaled 500,000 euros. The punishment meted out to Kirber was 150 daily rates, which considering his income is 10,545 euros.
The Supreme Court took the stance that the offense that Tool and Kirber were indicted for was intentional. Based on evidence, Toomas Tool gave clear orders for the sale of Arco Vara shares by "trickle-feeding" them to the market, thereby creating price pressure. Karoly Kirber, being an experienced securities broker, understood very well according to the Supreme Court what Toomas Tool's intention was and fulfilled his orders.
The court found it to be proven that Toomas Tool sold shares in Arco Vara in a short period of time in large amounts, which led to lowering of the price of the share. The court found that the aim of the action was not getting rid of Arco Vara stocks, but market manipulation because Tool continued to increase his holding in Arco Vara.
It appears from the evidence presented to the court that Toomas Tool controls nearly a third of the shares of Arco Vara and is a member of the company's supervisory board.
The first-tier Harju county court in October 2010 acquitted Tool and Kirber, finding that their guilt was not proven.
According to the charges, Tool wanted to take part in the management of Arco Vara but did not reach an agreement with the members of the supervisory board and other major owners of the company, Hillar-Peeter Luitsalu and Richard Tomingas, whom he then threatened with causing payment difficulties. The charges said Tool's motive was to undermine the economic interests of Luitsalu and Tomingas and increase his own stake in Arco Vara in order to take over management of the company.
The prosecutor's office took criminal action in the case in February 2009 on the basis of a notification of a criminal offense by the Financial Supervisory Authority.