Former EADS chief targeted in share probe

PARIS (Reuters) - Former EADS co-chief executive Noel Forgeard has been placed under formal investigation on suspicion of insider trading while at Europe's largest aerospace group, his lawyer said on Friday.

Two judges are investigating the selling of stock in 2006 by people inside EADS, weeks before the Franco-German-Spanish company's Airbus unit unveiled delays to its A380 superjumbo. The "shocked" 61-year-old was freed on bail in the early hours of Friday on condition that he pay a sum yet to be specified, his lawyer Jean-Alain Michel said.

Forgeard had been held in police custody for around 36 hours before appearing in front of judges late on Thursday. The announcement of worsening delays in building the world's largest airliner wiped a quarter off the value of EADS shares in June 2006 and triggered Forgeard's resignation.
EADS shares were 2.2 percent higher at 14.75 euros by 0702 GMT on Friday, boosted by a dip in high oil prices which had raised concerns over the capacity of cash-starved airlines to renew their fleets. Forgeard and other current and former executives have denied knowing about the A380 delays when exercising their right to trade stock in March 2006. EADS also has denied wrongdoing. Forgeard's lawyer said he had been cleared on a second count requested by prosecutors, that of misleading financial markets.

Being targeted for formal investigation in France is a step short of charges and does not imply guilt or necessarily lead to trial. Insider trading carries a maximum of two years in jail and a fine of up to 10 times the share trading profits.

Forgeard is the first person to appear before judges in an investigation that could embrace executives still at EADS.

Last month French regulator AMF wrapped up the exploratory phase of its own 18-month trading investigation and said it had found enough evidence to send a file on 17 current and former executives to prosecutors and its own sanctions service.

Core shareholders Lagardere and Daimler , which sold shares in April 2006, were also named in the AMF enquiry which looked at how much everyone knew of delays to the A380 and design problems on the A350 as far back as 2005. Both companies have denied breaking any rules.

The Washington Post
By Thierry Leveque and Tim Hepher
30, 2008; 3:30 AM