Cyprus Administrative Court Overturns Multi-Million Euro Fines Against Vardinogiannis Siblings

In a significant legal victory for Ioannis and Amalia Vardinogiannis, the Administrative Court has annulled the decisions of the Cyprus Securities and Exchange Commission (CySEC), which had imposed administrative fines of €6,388,300 and €50,000 respectively on the two siblings for alleged breaches of securities laws. The court accepted the appeals filed by the applicants, citing improper composition of the regulatory body as the decisive reason for the annulment.

The case stems from alleged violations of Cyprus’s securities legislation, specifically Article 9(1)(a) of the Law on Insider Dealing and Market Manipulation (Law 116(I)/2005), and Article 41 of the Cyprus Securities and Exchange Commission Law (Law 73(I)/2009), which relates to the provision of false, misleading, or deceptive information to the Commission.

According to CySEC, the offenses dated back to 2007, when Amalia Vardinogiannis purchased shares of Sea Star Capital from her brother and subsequently sold them on June 29, 2007, generating a profit of €6.4 million. The Commission alleged that Ioannis Vardinogiannis had violated Article 9(1)(a) of Law 116(I)/2005 because, at the time of the share transaction, he was in possession of insider information and knew or should reasonably have known that the information qualified as such. Specifically, the information in question related to strategic changes in Sea Star Capital’s shipping operations and to Ioannis Vardinogiannis’s involvement in the company’s share capital. CySEC asserted that, using this information, he acquired 19,358,487 shares through Amalia Vardinogiannis.

As for Amalia Vardinogiannis, the Commission maintained that she had breached Article 41 of the Cyprus Securities and Exchange Commission Law by providing “false, misleading, and deceptive information” to investigating officers and, by extension, to CySEC itself during the course of its inquiry.

Through their legal representatives, the applicants challenged the Commission’s decisions on several grounds, chief among them the argument that CySEC had not been properly constituted when the decisions were taken. The core of their appeal centered on the claim that the participation of certain Commission members across different sessions — notably that of Kypros Ioannides — was procedurally flawed and that the qualifications and appointment of some members were not adequately justified in accordance with legal standards.

The Administrative Court found merit in this argument, ruling that the body issuing the penalties was not validly composed at the time the decisions were made. As a result, the Court annulled the contested administrative sanctions and awarded legal costs of €1,700 plus VAT to each applicant per appeal.

This ruling marks a critical juncture in the long-running case, not only nullifying significant financial penalties but also raising questions about procedural adherence and internal governance within CySEC itself.

By fLEXI tEAM