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The Paris prosecutor dropped an investigation into alleged criminal insider trading by former Societe Generale SA investment bank chief Jean-Pierre Mustier a month after the French market regulator fined him for the same.
“The prosecution classified it for no follow-up,” said Dominique Borron, a spokesman for the prosecutor, by telephone today. He declined to provide a reason for ending the probe.
The Autorite des Marches Financiers fined Mustier 100,000 euros ($130,000) on June 30 for his Aug. 21, 2007, sale of 6,000 shares in Societe Generale. He liquidated most of his equity portfolio at the same time.
Mustier, 49, led the division where Jerome Kerviel worked before his unauthorized bets cost the bank 4.9 billion euros to unwind. Mustier testified at the former trader’s Paris trial last month. He said then that the decision to sell off his investments was based on his own observations of the world economy, and that he expected to be cleared by the AMF. Mustier retained 7,000 shares in the bank, France’s second-largest.
The AMF sanctioned the former banker, noting the bank had begun an internal modeling system to estimate losses related to the subprime market prior to the sale. The bank reported 1.1 billion euros of write downs linked to the U.S. residential real-estate market Jan. 24, 2008, when it announced the Kerviel trading loss.
“The level of Mr. Jean-Pierre Mustier’s responsibilities imposed on him” the requirement to know not to sell the shares at that time, according to the AMF statement on the punishment.
Mustier is appealing the AMF decision. Calls to his lawyer, Jean Veil, for comment were not immediately returned.
An engineer by training, Mustier joined Societe Generale in 1987 in Paris as a stock options trader. He held senior executive positions at the investment bank in Paris, Tokyo and Hong Kong before becoming chief executive officer of the corporate and investment bank in 2003.
To contact the reporter on this story: Heather Smith in Paris at hsmith26@bloomberg.net
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