It is sometimes hard to be the good guy.

It looks like longtime CySEC Chairperson Demetra Kalogerou spent at least part of her weekend defending the regulator’s announcement on Friday that it was imposing a fine of €650,000 on German bank Commerzbank AG.

Friday, CySEC put out a notice that it had completed an investigation into market manipulation by now defunct Laiki Bank (also known as Cyprus Popular Bank), and Commerzbank, resulting in CySEC imposing an administrative fine of €650,000 on Commerzbank for market manipulation.

Laiki had invested into two structured products issued by Commerzbank back in 2008. The composition of the underlying portfolio of the structured product was dynamic and was determined by the person appointed Index
Sponsor. A company called Marfin Egnatia Bank S.A – a subsidiary of Laiki – was initially set as the Index Sponsor. However, as a consequence of a cross-border merger between Marfin Egnatia Bank S.A. and Laiki, Laiki itself became the index sponsor as of March 2011. According to CySEC this created a clear potential conflict of interest, as Laiki’s own shares were incorporated into the underlying portfolio of the Structured Product with in 2011.

CySEC concluded that Laiki and Commerzbank used the structured product with as a vehicle in order for Commerzbank to act as a surrogate of Laiki in a disguised manner. They acted in concert to manipulate the market in relation to Laiki’s shares on several occasions in April and May 2011.

The fine was issued to Commerzbank, and not also to Laiki, since Laiki has been in administration since 2013 and CySEC noted that “the imposition of a fine to the CPB [i.e. Laiki] would further burden the financial position of its depositors, bond holders and shareholders.”

CySEC stated that the investigation formed part of its extensive investigation into Laiki’s activities and role in the run up to the financial crisis and subsequent bail-in of the Cyprus banking sector in 2013. However this issue did not really play a factor in Laiki’s eventual failure, which was due mainly to large real estate loans which Laiki and other Cypriot banks had made into Greece and elsewhere in Europe, which went bad when a financial crisis swept through the continent and real estate values plummeted.

CySEC noted that the case was originally brought to the attention of the regulator by Cyprus AKEL Member of Parliament Irene Charalambides. Ms. Charalambides posted on her Twitter account on Saturday: “Right after 7 years!”.

So back to Ms. Kalogerou and her weekend, on Saturday she posted on social media a triumphant note stating that:

“This investigation formed part of CySEC’s extensive investigation into CPB’s activities and role in the run up to the financial crisis and subsequent bail-in of the Cyprus banking sector in 2013. With this decision Cysec has finally completed all the investigations concerning that period of time.”

However some commenters took issue with her statement, replying with things like “Too little, too late and very selectively I am afraid,” and noting that “The 8 year investigation alone costs more than the fine.” Ms. Kalogerou went back to social media to defend her position, replying “Better late than never!! Don’t forget that this was the last one. We had done more than 10 different investigations of what had happened before the bail in,”, and also:

“Again not to have any misunderstandings this investigation started 2 years ago for events that took place 7 years ago. But from 2013-2020 we have investigated more than 10 different cases of market abuse and other issues for the banking sector that are already announced during these years for the same period. So this was the last one finished. U can find all the information at Cysec’s website at the section administrative sanctions.”