Regulator targets EADS over insider trading
French regulator AMF said on Tuesday it had found evidence of insider trading at Airbus parent EADS surrounding delays to its A380 superjumbo and that it would inform Paris prosecutors.
It also alleged the company had misled financial markets by failing to meet standards on the publication of information.
EADS defended its record on transparency and vowed to support its managers but warned the probe could have “significant consequences on its image and reputation”.
The findings were contained in a brief published summary of the conclusions to an 18-month AMF investigation which threatens to reopen chronic management and political battles surrounding Europe’s largest aerospace group.
The investigation was triggered by share trades carried out by top management and core shareholders before worsening delays to its A380 superjumbo hit the EADS share price in June 2006.
But the AMF said its investigation had also taken it back through company statements to the markets which were issued as far back as May 2005.
The findings do not mean anyone has been pronounced guilty, but the AMF will send its conclusions to an internal sanctions committee that will then give the unnamed suspects a chance to defend themselves and recommend any penalties.
The AMF said it had also decided to hand its findings “without delay” to Paris prosecutors.
“At last, EADS and its managers concerned will be in a position to defend themselves,” EADS chief executive Louis Gallois said in a statement.
“EADS will support its managers in their defence, it intends to demonstrate that it has applied standards of excellence when communicating to the market and has acted with full transparency.”
EADS shares fell 1% to €14,86. The company said it did not expect a material financial impact from the probe but warned the next steps in the proceedings could be long.
The aerospace group earlier declined comment on a report that the AMF had decided to report 17 individuals to its sanctions panel out of 21 originally targeted in the probe.
The AMF’s most extensive investigation to date is seen as a test both of the regulator’s powers and credibility and of the stability of EADS, rocked in the past by management disputes.
Power at the company, founded in 2000, was originally shared between French and German executives in a prickly arrangement of dual responsibilities which ended at a Franco-German summit last July.
In an implicit warning to the regulators, Gallois said in a newspaper interview last week that the inquiry could have “serious consequences” for EADS.
The company is battling to keep a restructuring plan on track in the face of a weak dollar and recently won a $35-billion deal to supply mid-air refuelling planes to the United States Air Force.
Rival Boeing and its backers in Congress are questioning the validity of the contract and are likely to leap on anything implying shady dealings at EADS, after an earlier contract to Boeing was cancelled in a corruption scandal.
An earlier AMF draft report was leaked last year and found evidence of “massive” trading in EADS stock by people involved in the company as production problems on the A380 unfolded. The plane entered service last year about two years late.
Top shareholders and a number of former and current executives have denied knowing anything about the extent of wiring problems on the A380 until after selling their stock.
The disclosure of the second and most serious of three delays in deliveries of the A380, the world’s largest passenger plane, sliced a quarter off EADS stock in June 2006 and forced out Gallois’ predecessor Noel Forgeard.
News of the delivery delay came weeks after core shareholders Lagardere and Daimler reduced their holdings and several executives exercised stock options.
Both companies have denied wrongdoing. â€’ Reuters