Former EADS chief Noel Forgeard has been ordered to pay one million euros as bail after he was charged with insider trading for selling company stock months before the group revealed serious production delays. (Story: K. Yahiaoui, C. Casali)
Former EADS head Noel Forgeard has been ordered to pay one million euros in bail after he was charged with insider trading at the European aviation group, a source close to the case said Friday.
Two investigating judges placed Forgeard under formal investigation early Friday morning.
Forgeard, 16 other executives and two major shareholders are suspected of taking advantage of insider information to sell large numbers of EADS shares in 2005 and 2006 before their price fell sharply. EADS is the mother company of aircraft manufacturer Airbus.
Forgeard has been charged with using insider information to sell company shares in the months before the European aviation group revealed production delays with its A380 superjumbo, his lawyer said Friday.
"Mr Forgeard has effectively been charged by the two magistrates after a very long discussion on insider trading," his lawyer Jean-Alain Michel told reporters.
“Noël Forgeard walked out free tonight but he will have to answer every summon from the investigating judges and give explanations about this insider trading case”, said Nicolas Germain, FRANCE 24’s reporter outside the financial police headquarters.
Prosecutors had requested that the 61-year-old businessman post bail.
Forgeard’s lawyer pleads innocent
Michel declined to specify any of the restrictions placed on his client, and reiterated that Forgeard maintains his innocence.
He risks up to two years in jail and a fine of up to 10 times the amount gained through the alleged insider trading.
According to a report by the French stock markets authority AMF, Forgeard sold a total of 360,000 EADS shares, held in stock options and worth 4.3 million euros, in two batches, in November 2005 and March 2006. His children also sold nearly 128,000 EADS shares in March 2007.
In June 2006, Airbus announced a six-month production delay on the A380. The value of EADS shares fell by 26% in one day and Forgeard resigned three weeks later.
The AMF said that he and 16 other executives at EADS and Airbus held privileged information at the time they sold their shares. Thomas Enders, a former co-chairman of Airbus and Airbus’s current boss, is on the list.
French group Lagardère and Germany’s DaimlerChrysler, which are EADS’ main private shareholders, each sold 7,5% of EADS’s capital on April 4, 2006 and are also suspected of insider trading.
Management “was informed”, says stock markets watchdog
The information at the heart of the investigation includes pessimistic financial forecasts for EADS, which were circulated internally five months before the company made them public in April 2006.
They also include planned delays in the A380 superjumbo project. “On March 1, 2006 at the latest, the members of the executive committee and those of the shareholders committee (of which Noël Forgeard was chairman) were informed (…) that a re-planning of the production operations was under way, which implied a change in the project’s schedule”, an AMF report reads.
Other insider information relates to delays in the A350 aircraft project.
Forgeard’s laywer said that “a number of other people will be summoned soon”, adding: “Mr Forgeard thinks and said that he did not engage in insider trading, nor did, to his knowledge, any executives, managers or shareholders.”
“This happens at a bad time for EADS; the group lost €437 million last year,” said FRANCE 24 business specialist Sylviane Bähr. She pointed out that the problems surrounding the A380 aicraft are still there: “Apart from the delays, EADS’s executive chairman Louis Gallois has announced a drop in orders, partly due to the oil price hike.”
Date created : 2008-05-30