EADS Managers Face Insider Trading Trial With DaimlerAndrea Rothman and Robert Wall
Airbus chief salesman John Leahy is among seven current and former executives of European Aeronautic, Defence & Space Co. who face trial on charges of insider trading in shares of Europe’s biggest aerospace company.
Among the others are Alain Flourens, who leads the A380 superjumbo program, Andreas Sperl, head of an EADS unit that turns passenger jets into freighters, and Olivier Andries, who is in charge of Safran SA’s Turbomeca engines unit.
The trial will consider whether executives sold shares in 2006 based on inside knowledge of delays of at least six months to the A380 superjumbo program. The Paris prosecutor’s office said yesterday that German carmaker Daimler AG and French media company Lagardere SCA, EADS investors at the time, also face court over disposals, even after French financial watchdog AMF cleared all the parties on related allegations in 2009.
While insider trading cases commonly go to court, it’s “unusual” for the regulator and the judiciary to come to different conclusions regarding such allegations, said Stephane Bonifassi, a Paris-based lawyer at Lebray & Associates.
The defendants will probably rely heavily on the findings of the sanctions committee of the AMF, or Autorite des Marches Financiers, which concluded that no privileged information had been received, though the criminal justice system is in no way bound by the regulator’s findings, he said.
Lagardere and Daimler, founding stakeholders in EADS, each cut their holdings by 7.5 percent in April 2006, with the executives disposing of stock in preceding months. Shares of the company, which makes Eurocopter helicopters and Eurofighter warplanes, as well as Airbus jetliners, fell 26 percent following an announcement regarding the A380 delays on June 14.
EADS, which has never itself been named in the investigation, said in a statement yesterday that the charges are “groundless” and that it stands behind the executives.
Leahy, who is also Airbus’s chief operating officer for customers, couldn’t be reached for comment. Neither could Flourens, who ran the A320 narrow-body program at the time of the share disposals, or Andries, who worked at Airbus in 2006.
Sperl said in a statement: “I am confident that the persons still involved will also be ultimately released from any charges as they have been previously released by the AMF.”
The other individuals who’ll stand trial are Noel Forgeard, who led Airbus from 1998 through 2006 before becoming co-CEO of EADS, Erik Pillet and Jean-Paul Gut, who have left the company. None of the men could be reached.
Paris-based Lagardere was “surprised” by the decision to go to court, it said in a statement, while Daimler spokeswoman Ute von Vellberg said the Stuttgart-based company was reviewing the indictment and that no trial date had been set. The companies have since disposed of their stakes.