Here's today's look at some of the top stories on markets and politics in Europe.

Italy threatens rating agencies with $316 billion lawsuit.

The Italian state auditor, Corte dei Conti, notified Standard & Poor's, Moody's and Fitch that the rating agencies may have violated Italian law by downgrading the country during the 2011 Eurozone debt crisis. An Italian prosecutor representing the audit body may demand damages of up to $316 billion, Corte dei Conti said. According to the auditor's letter to S&P, one of the reasons the string of downgrades could be deemed illegal is that "S&P never in its ratings pointed out Italy's history, art or landscape which, as universally recognized, are the basis of its economic strength." More details of the potential mammoth lawsuit will are expected from the prosecutor in the case on Feb. 19. S&P is calling the Italian accusations "frivolous," and it has a point: Leonardo and the rolling hills of Tuscany are no help if the Italian government cannot get public finances together. It is not for the downgrades that S&P and its competitors should be blamed but for their failure to send out danger signals ahead of both the U.S. mortgage crash and the European debt crisis.

EU approves four-year prison term for market manipulation.

The European Parliament approved a directive that provides for a 4-year minimum prison sentence for manipulation of financial markets and insider dealing. This is the first time the EU states have agreed to a common criminal law norm. Member states will have two years to transpose the Market Abuse Directive into national law. The directive is a specific response to the Libor scandal, in which interest rates were manipulated by traders. Banks and financial companies have already been fined and their employees indicted for their roles in interest rates scams, and the new rules will not apply to them. Punishment under the directive, however, is possible for the culprits in the unfolding foreign exchange rate fixing scandal. This affair is likely to be the equal of Libor in scale, and the circle of potential suspects is not yet defined. Europe keeps tightening its rules against financial abuse, and soon people running scams in London will have as much to fear at home as in the U.S.

Christie's cancels auction of Portuguese Miro collection.

Protests in Portugal over the planned sale of 85 paintings by Catalan abstract artist Joan Miro, owned by a nationalized bank, turned out to be effective. The auction house Christie's, which was supposed to sell the works in London, pulled the lots from its Impressionist, Modern and Surrealist sale. Christie's valued the collection at about $50 million, and art lovers and museum professionals in Portugal said the amount was laughable compared to both Portugal's total debt of more than $270 billion and the collection's value as a national treasure. Politicians opposed to the sale took the government to court, and though they failed to obtain an outright ban, a judge ruled that the paintings had been sent to London without proper authorization. Christie's did not want the risk of further action and will keep the works in storage until something can be decided. The Portuguese government has not asked for the collection to be sent back and is determined to sell it, but the auction house will now be extra careful to avoid trouble with prospective buyers. Portugal may yet realize that there must be better ways to raise $50 million than selling one of the biggest Miro collections in the world. Perhaps it will even go as far as to exhibit the paintings for the first time since they were nationalized.

Greek gambling monopoly privatization questioned.

A prosecutor in Athens is investigating last year's sale of Greece's gambling monopoly, OPAP, to a consortium of local, Czech, Slovak and Russian investors. The $878 million deal allowed the Greek privatization agency, Taiped, to meet its repeatedly reduced 2013 revenue target of about $1.7 billion, and show that Greece is on track with the austerity program imposed on its by its international bailout. The privatization, however, was fishy from the start. Right after it went through, Taiped chief Stelios Stavridis became the third head of the agency in 12 months to lose his job. He had been photographed on board a private jet that belonged to Dimitris Melissanidis, the principal Greek partner in the consortium that bought OPAP. Melissanidis, a self-made billionaire with a murky past, may have been unqualified to own the gambling business because of prior convictions. Also, the ownership schemes within the consortium are far from transparent. If the sale is reversed, Greece's notorious privatization program will be shown up as pure window-dressing. As the current sick man of Europe, Greece needs to do more to repay its debts.

Russian senator to sue former partners in New York.

Leonid Lebedev, a member of the upper house of the Russian legislature, has filed suit in New York against his former partners, billionaires Len Blavatnik and Viktor Vekselberg. He is demanding $2 billion for his "secret" share in TNK BP, the Russian oil company bought by state-owned Rosneft last year for $55 billion. Vekselberg and Blavatnik, a U.S. citizen, received $13.8 billion from the deal. In taking his case to New York, Lebedev breaks with the established practice of wealthy Russians, who usually prefer settling their disputes in London courts. Now, New York will be treated to the spectacle of an "oligarch trial," with talk of informal deals and mob-like arrangements worth billions of dollars. In all such cases, it is the Russian legal system that is put on trial: Not even legislators trust it to resolve billion-dollar issues.

(Leonid Bershidsky writes on Russia, Europe and technology for Bloomberg View. Follow him on Twitter.)

To contact the writer of this article: Leonid Bershidsky at lbershidsky@bloomberg.net

To contact the editor responsible for this article: Marc Champion at mchampion7@bloomberg.net