Stockholm stock exchange halts trading of troubled HQ bank.

• Carnegie stopped from saving Sweden's HQ Bank
• HQ Bank accountant KPMG reported after flaws
• HQ Bank announces involuntary liquidation

The Stockholm stock exchange said on Tuesday it had halted trading in shares of Swedish investment bank HQ Bank, which has been forced into involuntary liquidation after financial authorities revoked its licences.

The Stockholm stock exchange said in a statement it had "decided to halt the trading in shares HQ AB," the holding company of HQ Bank.

"The Swedish Financial Supervisory Authority (FI) has been notified and in accordance with ... the Securities Markets Act ... decided that this trading halt shall remain until further notice," it added.

On Saturday, FI announced it had revoked HQ Bank AB's licence because it had breached Swedish legislation and demonstrated serious deficiencies in its trading operations.

According to the supervisory authority, the bank among other things overvalued its trading portfolio to hide that it had in fact been under capitalised since the end of 2008.

HQ Bank, which manages about 60 billion kronor (6.3 billion euros, 8.1 billion dollars) from some 20,000 depositors, said on Monday that efforts to find a way to keep the bank operating had failed and that it had been forced into involuntary liquidation.

HQ AB's shares shed nearly 84 percent of their value in trading on the Stockholm stock exchange Monday.

The bank, now headed by liquidator Bioern Riese, remained closed for a second day on Tuesday, acknowledging in a statement that "opening the bank without having found (a new buyer) has been calculated to lead to such liquidity pressure that the bank would not be able to meet it."

"No withdrawals will therefore be permitted," it said.

Despite fears of a run on the bank, the decision to lock in customers' money met harsh criticism.

FI said on Monday it had reported HQ's auditor, Johan Dyrefors at KPMG, to the Swedish accountancy regulator, and the Swedish Economic Crime Authority told AFP Tuesday prosecutor Bernt Berger had opened an inquiry into whether criminal charges should be brought in the case.

The Dagens Industri financial daily meanwhile reported on Tuesday that many of HQ Bank's some 200 employees faced millions of kronor in debt if the bank failed, owing to a complicated compensation system based on convertible bonds.

Many employees had invested personal funds or taken up large loans to participate in the system and purchase the bonds which will be worthless if the bank is declared bankrupt, the paper reported.