Inside-Trading Case Into $23 Million Jackpot Hangs by Thread
Insider-Trading Suspects Edge Closer to Nixing French Probe
(Bloomberg) --
The two main suspects in France’s biggest insider-trading probe are edging closer to nixing the entire case after an adviser to European Union judges suggested that their privacy rights were violated by investigators to obtain key evidence.
Traders Alexis Kuperfis and Lucien Selce have been charged in France for making some 20 million euros ($23 million) in suspicious transactions. They deny the accusations and have been trying to overturn the charges by saying investigators overstepped their authority.
An EU court advocate general agreed, saying Thursday that investigators improperly accessed the detailed phone records of the two suspects. He criticized French law at the time for failing to guarantee their privacy rights.
While Manuel Campos Sanchez-Bordona’s advice to judges at the EU Court of Justice is non-binding, a ruling potentially hampering the French case could follow within the next six months.
The guidance comes after France’s top court questioned last year whether evidence used to tap the burner phone of a banker indirectly passing confidential merger tips to traders was obtained illegally. Rather than throwing out the case, the French court referred the matter to the EU tribunal to decide whether the failings can be overlooked.
Sanchez-Bordona said that national legislation forcing telecommunications companies to store phone data on a “general and indiscriminate basis” for the purpose of an insider-trading probe -- as was the case in France -- is contrary to EU law.
He added that national judges, such as in France’s top court, can’t limit in time the effects of that incompatibility.
Frédéric Peltier, a lawyer for Selce, said that the advocate general’s opinion suggests the investigative acts carried out by officials at France’s stock-market regulator “were illegal.” An attorney for Kuperfis didn’t immediately respond to a request for comment.
At least seven other people have been charged in the Kuperfis and Selce probe, including former bankers at Merrill Lynch and Societe Generale SA as well as an ex-Brunswick consultant.
EU judges are weighing two other separate cases that also question investigators’ and telecommunications companies’ rights to store and access personal phone or internet data.
One of the cases led to the conviction in Ireland of a man in a murder case. The third case stems from a challenge by companies, including SpaceNet AG, a German Internet provider for businesses, over the validity of rules on the storage periods of traffic and location data.
For all three cases, Sanchez-Bordona was building on a 2020 ruling from the EU Court of Justice that specified that only serious threats to national security should warrant access to phone data stored on a general and indiscriminate basis. That exemption includes terrorism cases but the advocate general said on Thursday that it excludes both market-abuse cases and alleged murders.
In the French insider-trading case, the country’s top court will build on the upcoming EU court ruling to decide whether to throw out the charges.
For France, where insider dealing has rarely been pursued with much success, the investigation seemed to provide an opportunity to burnish its credentials.
The case focused primarily on a failed oil-services deal and Air Liquide SA’s takeover of U.S. chemical producer Airgas Inc. As part of the probe, cops wiretapped suspects and conducted raids in upscale ski resorts and posh Paris neighborhoods based on information obtained from the disputed phone records.
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