In August of 2010, the Swedish Financial Supervisory Authority (FI) decided to revoke HQ Bank's licence, for having serious deficiencies in its trading operations and for taking irresponsible risks.
The bank was forced into liquidation, its stocks crashed, and soon after the national economic crime authority opened a criminal investigation into the bank's financial reporting. Prosecutors believed that the bank had reported erroneous information about the value of its trading portfolios and that it did not have sufficient capital to stay afloat.
Today, six years later, five people, comprised of three former managers, the two founders and the bank's auditor, go on trial for embezzlement and swindling. They are suspected of having tried to cover up bad investments and losses during the financial crisis.
"There seems to be a perception among Swedes that corporate bigwigs always get away. This case shows that everyone is equal in front of the law," says Gunilla Sandblom, at the Economic Crime Authority,to Swedish Radio News.
Hans Strandberg, a lawyer representing one of the two founders, tells Swedish Radio News that he believes that the prosecutor will have a hard time proving that the bank cheated with their book-keeping.
"We don't believe that he will be able to do that. Several experts will take the stand and explain that this was all done in a correct way, and that will mean that the case will get dropped," says lawyer Hans Strandberg.
The five suspects could get a maximum of six years in jail. They have denied all charges and the trial is expected to go on for at least a month.
People who owned stock in the bank have requested SEK 5 billion in damages for the money that they lost when the bank crashed. That trial is expected to start later this year, says lawyer Christer Sandberg, who represents the stock-owners.
"HQ Bank had a cocky attitude and claimed that they did not have any problems at all during a time when all other Swedish banks did. Later, it has been established that they simply misled the market and used made up numbers to value their worst performing portfolios," Sandberg says.