Lansdowne Partners deny involvement in Icelandic market manipulation

Andrew Honnor, PR representative for Lansdowne Partners, one of the four hedge funds named by Kaupthing Bank for manipulating the Icelandic market, has denied the Kaupthing´s accusations according to widespread reports in the Icelandic press.

“Such allegations – that we are manipulating share prices – are extremely serious. We absolutely deny it,” said Honnor in a report posted on the Icelandic news site and Iceland Review on Thursday.

Sigurdur Einarsson, Chairman of Iceland´s biggest bank Kaupthing, told on Wednesday that four foreign hedge funds had instigated a systematic attack on the Icelandic financial market and Icelandic banks, and had gone to great lengths to profit from taking short positions in stocks and credit default swaps (CDS).

Einarsson named the UK hedge funds involved as Trafalgar Fund, Ako Capital, Cheney Capital and Lansdowne Partners.

According to Einarsson, these funds systematically contacted the British media and analysts from British banks in an effort to widen CDS spreads and bring down the share price of the banks.

The news follows comments from the Central Bank of Iceland which attributed the recent rapid devaluation of the Icelandic currency to a speculative “attack” by “unscrupulous dealers”. The Icelandic krona (ISK) has fallen by as much as 25 percent against the euro this year.

The Prime Minister of Iceland, Geir Haarde, said at a meeting of Nordic political leaders in Sweden on Wednesday: “It’s clear that there are people out there trying to make money at our expense, and we want to get them off our backs.”

The Central Bank has already asked the Icelandic Financial Services Authority to investigate whether or not investors had deliberately spread false rumours to the media in order to bring turmoil to the Icelandic financial markets.

Meanwhile the Central Bank raised its key interest rate to 15.5% on Thursday in order to protect the currency and control mounting inflation.