Further details, to be released by the courts later this week, are expected to allege a conspiracy by Kaupthing executive chairman Einarsson and other bosses at Iceland's largest bank, claiming they secretly used the bank's funds to indirectly buy Kaupthing shares in the hope of propping up its share price.
Holdings in Kaupthing shares were allegedly acquired in the name of selected major clients, financed by generous loans from the bank. According to an Icelandic parliamentary report, almost 42% of Kaupthing shares were held by the bank as loan collateral at the end of September 2008, much of that without the knowledge of other stakeholders in the bank.
The criminal case is the largest in a series of fraud prosecutions that have been brought to court in Iceland in recent years, and may be one of the largest alleged market manipulation conspiracies ever seen in Europe.
Among the Kaupthing clients who could be named in papers released later this week is British retail tycoon Kevin Stanford – though there will be no allegation of wrongdoing on his part. Stanford, once one of Britain's most successful high street fashion tycoons, believes he is one of the biggest victims of a fraud conspiracy engineered by former bankers at Kaupthing.
A letter from his lawyers, leaked to a newspaper two years ago, said the bank had loaned Stanford about £130m for purchases of his Kaupthing shares. It claimed this was part of a pattern of "activities with the express purpose of artificially maintaining its share price".
Three years earlier an internal summary of Kaupthing's big client loan book appeared on Wikileaks showing Stanford as the bank's fourth largest shareholder with a stake of 4.2%.
That revelation surprised many in the UK as the Ferrari-loving entrepreneur was best known for a string of high street and fashion investments, including All Saints, Karen Millen, Mulberry, Oasis, Debenhams and House of Fraser.
Former Kaupthing boss Einarsson is already on trial in Reykjavik over unconnected market manipulation allegations concerning a controversial purchase of a 5% stake in the bank by Sheikh Mohammed Bin Khalifa al-Thani of Qatar weeks before the bank collapsed in 2008. Prosecutors claim the bank effectively financed this purchase while encouraging investors to falsely believe the risk was taken by Sheikh Mohammed.
There are reportedly 50 names on the witness list at Reykjavik county court, including that of Sheikh Mohammed. He is not accused of wrongdoing but it is not known whether he will answer requests to appear in the witness box.
Meanwhile, unconnected al-Thani investments in Barclays bank last year became the subject of an inquiry by the Serious Fraud Office in the UK.
Last year Einarsson was effectively barred from the City of London for five years after striking a deal with the Financial Services Authority, which had been investigating failed UK bank Kaupthing Singer & Freidlander (KSF).
The former executive chairman, who lived with his family in Chelsea, became one of London's most sought after bankers as Kaupthing aggressively expanded into the UK in the 2000s, backing high profile entrepreneurs such as Christian and Nick Candy, Robert Tchenguiz, Kevin Stanford and Baugur tycoon Jon Asgeir Johannesson.
Since the bank failed in Iceland's financial meltdown in October 2008, however, Einarsson has found himself linked to several criminal inquiries. In 2009 The Observer reported that the London-based banker was the first head of a major European bank to be formally classed as a criminal suspect, when Iceland's special prosecutor Ólafur Hauksson focused on his activities. The following year Einarsson declined invitations to leave London and return to Iceland to be interviewed by prosecutors. It was not until he appeared on Interpol's wanted list that he eventually agreed to travel.
In the UK the Serious Fraud Office last year dropped a three-year probe into Kaupthing and its largest customers, Mayfair investment tycoons Robert and Vincent Tchenguiz. Einarsson, the Tchenguiz brothers and others had been the subject of dawn raids in 2010 as part of the SFO investigation, though the grounds for these raids were successfully challenged by the Tchenguiz brothers at judicial review.
The SFO was forced to accept there had never been any evidence to justify a probe into Vincent Tchenguiz and months later also decided to drop its probe into his brother Robert and into Einarsson and his colleagues. Both are now seeking damages totalling £300m from the SFO.
As well as charges laid against former Kaupthing bosses, Iceland's special prosecutor Hauksson has also this week issued an unconnected indictment against former Landsbanki chief executive Sigurjon Arnason and five ex-colleagues, also alleging market manipulation.
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