French Prosecutor Opens Probe into EADS Insider Dealing Allegations

The Paris prosecutor's office has opened a probe into insider trading allegations centering on Airbus parent European Aeronautic Defence & Space Co., judicial officials said Thursday.

The investigation is a response to complaints lodged last June by individual EADS shareholders, who suffered from sharp movements in the Franco-German group's stock price earlier this year, judicial officials said, speaking on condition of anonymity because the probe is ongoing.

It also follows the June announcement by France's Financial Market Authority that it would investigate sales of stock held by some of EADS' former executives.

An investigating judge has not yet been appointed to look into the allegations, officials said.

Michael Hauger, EADS' head of corporate media relations, said the company had not yet received formal notification of the probe.

"On principle we do not comment on ongoing investigations," he said, adding that EADS would "fully support investigating authorities" during the probe.

Former EADS co-chairman Noel Forgeard and his children exercised stock options in the company at a profit of euro2.5 million (US$3.2 million) in March, just weeks before EADS announced lengthy delays to Airbus' A380 superjumbo program. The announcement caused the company's stock price to tumble.

Forgeard has denied accusations of insider dealing, saying he sold the shares before being informed of the A380 production delay. The probe by prosecutors is general and does not specifically target him.

Forgeard stepped down from his position at EADS and was replaced by former French railways boss Louis Gallois.

EADS and Airbus are struggling to contain the damage to its finances and reputation from delays to its A380 superjumbo blamed on wiring problems.

The company stunned investors in June by doubling the 555-seater A380's production delay to one year - then doubled it again to two years earlier this month, warning that the delay would wipe euro4.8 billion (US$6.1 billion) off EADS' profits over four years. However, it promised euro2 billion (US$2.5 billion) in annual cost cuts by the end of that period.

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