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Kaupthing Ex-CEO, Chairman Sentenced to Prison by Iceland Court

Dec. 12 (Bloomberg) -- The former chairman and chief executive officer of failed Kaupthing Bank hf were both sentenced to prison.

Hreidar Mar Sigurdsson, the former CEO, received a 5 1/2-year sentence and Sigurdur Einarsson, the ex-chairman, was handed 5 years, said Bergthora Benediktsdottir, a secretary at the District Court of Reykjavik, today by telephone.

Magnus Gudmundsson, the head of the Luxembourg unit, and the bank’s second-largest shareholder, Olafur Olafsson, both were sentenced to 3 1/2 years.

They were indicted in February 2012 by the Special Prosecutor investigating the nation’s economic collapse. The prosecutor has been investigating the former executives of what was Iceland’s largest bank before it collapsed in October 2008, an event that contributed to the worst economic slump in six decades.

Glitnir Bank hf and Landsbanki Islands hf also failed in October 2008. After taking control of the banks, the government was forced to seek a $4.6 billion International Monetary Fund-led loan to stay afloat, a program the country exited in August 2011.

To contact the reporter on this story: Omar Valdimarsson in Reykjavik at valdimarsson@bloomberg.net

To contact the editor responsible for this story: Jonas Bergman at jbergman@bloomberg.net

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