Two weeks ago we were surprised to read that Italian prosecutors had launched a probe into potential accounting fraud and market manipulation by the executives of Italy's third largest, and the world's oldest bank, Monte Paschi just weeks after its most recent bailout was announced. It didn't last long: moments ago Reuters reported that less than two weeks after news of the probe leaked, Milan prosecutors have filed a request to shelve a probe for alleged market manipulation and false accounting against the chief executive of Monte dei Paschi di Siena and the bank's former chairman, three judicial sources said.
According to Reuters, news of the probe, which emerged last month, risked undermining investor sentiment in the bank's management as it seeks to raise up to 5 billion euros in an emergency capital increase by the end of the year. A judge will now be called to rule on the request, which was submitted by prosecutors on Thursday.
As reported on August 18, a source had told Reuters last month that Monte dei Paschi CEO Fabrizio Viola and former chairman Alessandro Profumo were being investigated in relation to the way the bank booked two derivatives trades in its accounts between 2011 and 2014.
One of the sources said on Thursday the request to shelve the probe was warranted given that there was ample reference to the nature of those trades in a separate section of the bank's financial accounts and regulators had been informed.
The probe started last year in Siena and it was transferred to Milan, which has jurisdiction over market manipulation crimes, in July.
In other words, Italy realized it couldn't have the alleged truth about cook-booking by the bank's top executives coming out just as the bank was scrambling to execute its €5 billion bailout and as a result, any potential wrongdoing by the bank's executive will remain undisclosed. Justice wins again.