Paschi Board Member Briamonte Suspended Over Leak Allegations

An Italian magistrate suspended a director of Banca Monte dei Paschi di Siena SpA, the world’s oldest bank, after prosecutors accused him of abusing privileged information.

Prosecutors allege Michele Briamonte leaked to the media Monte Paschi’s decision to sue Deutsche Bank AG and Nomura Holdings Inc. over two derivatives that soured before the bank released a public statement on March 1, said the official in Siena, who asked not be identified because he wasn’t authorized to speak publicly. The stock fell 2.3 percent that day and a further 3.3 percent the next trading day.

Briamonte will be barred from exercising his duties as a board member for at least two months pending the conclusion of the investigation into allegations he abused privileged information, Monte Paschi said in a statement to the stock exchange today.

Briamonte plans to challenge the judge’s decision because it lacks legal foundation, his lawyers, Franco Coppi and Luigi Chiappero, said in an e-mailed statement today.

Monti Paschi filed separate suits in March seeking 1.2 billion euros ($1.6 billion) of damages from the two investment banks and an unspecified amount from former Paschi managers over two derivatives contracts from 2008 and 2009, dubbed Santorini and Alexandria, that the Italian lender used to hide losses. Both Nomura and Deutsche Bank have said they will “vigorously” contest any suggestion of wrongdoing.

Prosecutors are probing the former managers for alleged market manipulation, false accounting, obstruction of regulatory activity, criminal association, money laundering and fraud linked to derivatives.

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