The head of the European Commission (EC) [official website] Sunday announced plans [Le Parisien report, in French] to propose criminal sanctions for wrong-doers in the financial sector. In an interview-format article published over the weekend, EC President Jose Manuel Barroso [official website] stated that during the coming week he will propose to introduce into European law for the first time the recognition of individual criminal liability [AFP report] for financial players who break European regulations. An English translation of his statement reads:
I will propose Thursday that individual criminal responsibility of financial actors is finally recognized in European law. ... We have seen abusive behavior in the markets. Some have caused the current crisis. We will regulate these practices! Those who violate will incur penalties. It will be a first in European legislation and a strong signal.Barroso's proposals would oblige EU nations to amend their statutory framework to include criminal penalties for financial regulation violations.
The European debt crisis [BBC backgrounder] has led to calls for tougher regulation of financial sectors, especially in the less transparent markets for collateralized debt obligations and other exotic securities that sparked the worldwide financial crisis. Less solvent nations such as Greece and Spain have been forced to pass austerity measures and seek funds from more stable EU neighbors like Germany. JURIST Guest Columnist Larry Eaker of the American University of Paris recently wrote [JURIST op-ed] that the debt crisis in the EU has made it necessary to examine whether it is legally possible for a eurozone nation to leave the EU and abandon the joint currency altogether. Last month a German high court rejected challenges [JURIST report] brought against the constitutionality of EU rescue package and financial aid package given to Greece. In August Spain agreed to amend its constitution [JURIST report] to limit its national deficit. Italy and Spain have succeeded in lowering borrowing costs by taking advantage of a European bond-buying [Houston Chronicle report] program, and Sweden has resolved to protect its banking and financial institutions [The Local report] from effects of the debt crisis by increasing funds for more financial inspections and deposit guarantees. In June, Greece, proposed a constitutional referendum [JURIST report] aimed at eliminating the systemic governmental inefficiency and waste that led to the crisis that has wracked the country.