Lagardere and Daimler on trial over EADS insider trading

French conglomerate Lagardere and German auto giant Daimler went on trial on Friday on charges of insider trading in the sale of shares in aerospace and defence group EADS.

Also in the dock are seven executives from EADS, including a former chairman and financial director, and its subsidiary Airbus.

The defendants, who deny any wrongdoing, are alleged to have sold shares in EADS in late 2005 and early 2006 with the knowledge that Airbus was encountering problems with the production of its A380 super jumbo.

Two months later, Airbus announced a six-month delay in the first deliveries of the A380, which caused a sharp fall in EADS’ share price.

The lawyers for the accused say their clients have already been cleared of wrongdoing in 2009 by France’s stock market regulator AMF, which ruled there was no evidence shareholders had profited from insider knowledge.

But a group of small investors, APPAC, remained unconvinced and registered a criminal complaint that has grown into a full-blown probe by magistrate Serge Tournaire.

“The question now hinges on the authority of the AMF judgement,” said Jean-Yves Le Borgne, lawyer for Airbus chief operating officer John Leahy, an American citizen.

The lawyers argue the defendants cannot be tried twice on the same grounds, although France allows for separate civil and criminal prosecutions.

“What we want above all is financial compensation,” said Frederik Karel Canoy, lawyer for some of the small shareholders.

Under French law, anyone convicted of insider trading is liable for up to two years in prison and a fine of up to 10 times the amount deemed to have been saved or gained as a result of the illegal deals.

Among the executives in the dock are Noel Forgeard, the former joint chairman of Airbus parent company EADS and former EADS financial director Andreas Sperl.