Published: Tuesday, 4 Feb 2014 | 8:42 AM ET
By: Arjun Kharpal|News Assistant, CNBC EU News Digital Team
Financial market abusers could face a minimum of four years in jail under new plans voted through the European Parliament on Tuesday amid a string of financial scandals.
The European Union (EU) -wide laws will force national governments to impose a minimum of four years jail time for "serious offenses" such as manipulating the Libor benchmark. Judges can up the jail sentence if they see fit.
Among the offenses included in the law are placing an order which gives false or misleading signals about the supply or demand of a financial instrument or providing false or misleading information to manipulate the calculation of benchmarks, such as the Libor or Euribor.
"Criminals who get rich by manipulating markets and insider dealing should not get away with just an administrative penalty," British member of European Parliament (MEP) Arlene McCarthy, said in a press release.
"Ensuring that justice is seen to be done will help to rebuild our citizens' trust in financial markets."
The new rules were approved by 618 votes to 20, with 43 abstentions, and form part of the EU's crackdown on market abusers.
In September, European lawmakers passed regulations that enforced tough fines on individuals and companies that manipulate the financial markets.
The financial world has been hit by a litany of scandals over the past few years, from the rigging of Libor, to manipulation of the foreign exchange market. The latest set of EU rules aims to harmonize the law across all 28 member states.
"Today the European Union is sending a clear signal: there must be zero tolerance for manipulators in our financial markets," the EU's justice commissioner Viviane Reding said in a statement.
McCarthy also singled out the U.K. and took fire at the country for not jailing anyone in relation to the Libor rigging scandal.
But one lawyer told CNBC that while the EU rules will strengthen criminal sanctions, some member states, including the U.K., have stronger rules already.
"These proposals will tighten up EU-wide regulation of insider dealing and market manipulation, but in a number of respects they will only be raising EU regulation to the level of the pre-existing U.K. regime that has been in place since 2001 - UK criminal law already covers all the market abuse offenses and even goes further," Mark Compton, financial regulation partner at Mayer Brown said in a telephone interview.
Member states will have until 2016 to implement the new rules.