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Thu, Oct 04, 2007 - Page 10 News List

Airbus accused of insider trading

`MASSIVE' SCALE Both French and German authorities are conducting inquiries into alleged wrongdoing by executives at Airbus and EADS, its Franco-German parent


The French stock exchange regulator has accused major shareholders and managers at Airbus and its parent European Aeronautic Defence and Space Co (EADS) of committing insider trading on a "massive" scale, the daily Le Figaro reported yesterday.

The report said that the Financial Market Authority (AMF) sent a "preliminary note" to prosecutors in Paris saying that executives and board members were aware of profit-damaging problems with the A380 superjumbo and mid-range A350 when they sold shares or exercised stock options between November 2005 and March last year.

The problems and a profit warning were publicly announced in June last year, sending the EADS stock price crashing 26 percent in one day.

The AMF and Paris prosecutor Xaviere Simeoni are conducting separate inquiries into alleged wrongdoing by executives at Airbus and EADS.

German prosecutors are also investigating suspected insider trading in shares of EADS, a joint Franco-German company.

Current EADS CEO Louis Gallois, speaking to reporters in Paris yesterday, noted that the report referred to "preliminary" information and refused to comment on its contents.

In the note, Le Figaro said, the AMF said it believes Arnaud Lagardere, then co-chairman of EADS; EADS joint CEOs at the time, Thomas Enders and Noel Forgeard; some members of EADS's executive committee; and Airbus' CEO at the time Gustav Humbert knew about problems with the A380 and A350 and with profit expectations before selling their shares and exercizing stock options.

The AMF noted the "concomitant and massive character" of the stock sales, according to the newspaper.

Forgeard and his children alone exercised stock options in the company at a profit of 2.5 million euros (US$3.2 million) in March last year, according to AMF filings.

The note also reportedly said that EADS shareholders Lagardere SCA of France and DaimlerChrysler of Germany knew about the company's woes before announcing in March last year that they would reduce their stakes.

The French state -- another key shareholder in EADS -- also was warned about the problems, Le Figaro said, citing a note to then-finance minister Thierry Breton in December 2005 suggesting that the government reduce its 15-percent stake in the company.

Representatives at the AMF and at the prosecutor's office could not immediately be reached for comment.

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