Potato Seller Who Heard Insider Tip by Chance Cleared

(Bloomberg) -- Eleven people were fined a total of 1.67 million euros ($1.9 million) in France for illegal trades on insider information ahead of a 2012 acquisition by Air Liquide SA, while regulators cleared a potato seller who said he got the tip by accidentally overhearing a conversation at a railway station.

Monaco-based investor Francesco Angelini earned the most from the trading, and received the largest penalty by far -- 800,000 euros. The enforcement committee of France’s markets regulator also fined a retired Swedish investor 400,000 euros, while 9 other people will have to pay between 26,000 euros and 100,000 euros.

The probe focuses on investments made into LVL Medical Groupe SA days before Air Liquide announced it had started exclusive talks to buy 70.5 percent of the home health-care firm for 316 million euros. The June 2012 news made LVL’s shares surge as much as 87 percent, the biggest intraday advance in its history. A lawyer for Angelini didn’t immediately respond to a request for comment.

Last month, AMF officials detailed during the case’s hearing how the defendants allegedly obtained the insider information via different networks including one made up of employees at Dinno Sante, an Air Liquide subsidiary.

A much more amateurish circle also emerged.

The potato seller -- who didn’t trade on the non-public tip but said he’d shared it with his brother -- was able to convince the AMF body that he didn’t know that information garnered from overhearing a private conversation in a public space could even be protected. He told investigators he had always worked in the agri-food industry and never traded securities.

“Given his training, his qualifications and his work history, it can’t be proven that the defendant should have known that the information he had was insider data,” the AMF committee said in its decision published Monday.

The potato seller told investigators, according to the AMF ruling, that a business contact “brought me back to the train station of Arras and while we were at the cafe, we heard that there was a plan for Air Liquide to buy LVL Medical. We thought to ourselves: That’s huge.”

The man later told his brother about the tip in front of another acquaintance “who had come to repair his boiler.” The AMF’s enforcement committee fined the brother for making a 13,052 euro profit by trading on the tip.

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