Paris: France’s market regulator slapped a record 14 million euro ($19 million) fine on a Lebanese trader Thursday for insider trading surrounding the 2008 buyout of logistics company Geodis by France’s national rail firm, SNCF.
The previous record of eight million euros was imposed on luxury group LVMH earlier this year for activity related to its investment in rival Hermes.
In a statement, the AMF financial market authority said it was imposing the fine on trader Joseph Raad for using “inside information on the launch of a takeover of Geodis by the SNCF, from which he profited.”
It said he earned more than six million euros from the information.
His cousin, Charles Rosier, then a managing director at Swiss bank UBS which was involved in the takeover, was also fined 400,000 euros “for having passed on the information,” the statement said.
On April 6, 2008, SNCF made an offer for the entire capital of its transport and logistics subsidiary Geodis — in which it already had a stake of around 42 percent — that valued the firm at more than one billion euros.
The AMF alleged in its statement that Rosier found out about the imminent takeover proposal before March 20 that year “at the latest.”
Raad then bought more than eight million euros of Geodis shares and related financial products between March 20 and April 4.
According to the AMF, these were “atypical” acquisitions compared to what Raad usually opted for, and they were “very risky, given the downward trend and low liquidity of Geodis shares.”
The AMF concluded that these acquisitions could “only be explained by the guarantee that the price would rise soon”, and launched an investigation.
The case differs from the LVMH affair, where the luxury group was penalised for not informing the market of its surprise increase in Hermes’s capital.
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