Sponsor Message:
Civil Aviation Forum
My Starred Topics | Profile | New Topic | Forum Index | Help | Search 
Forgeard Accused Of Insider Trading  
User currently offlineRichardPrice From , joined Dec 1969, posts, RR:
Posted (8 years 2 months 2 weeks 2 days 16 hours ago) and read 2528 times:

In a twist to the recent A380 development problems, EADS CEO Noel Forgeard has been accused of insider trading when he sold shares in EADS earlier this year.

In total, 6 EADs executives were seen to sell shares during March 2006.

EADS has responded by saying that their executives were only allowed to exercise options within a very small timeframe each year, and that the first internal mention of further problems only arose in April 2006, too late for the share sales to be based on them.

http://news.bbc.co.uk/1/hi/business/5086152.stm

[Edited 2006-06-16 13:29:50]

18 replies: All unread, jump to last
 
User currently offlineDanny From Poland, joined Apr 2002, 3509 posts, RR: 2
Reply 1, posted (8 years 2 months 2 weeks 2 days 16 hours ago) and read 2474 times:

This is also reported here:

http://www.flightglobal.com/Articles...delay+before+April+EADS+share.html

Very stinky case. Yet another reason to get rid of him.


User currently offlineAerospaceFan From , joined Dec 1969, posts, RR:
Reply 2, posted (8 years 2 months 2 weeks 2 days 15 hours ago) and read 2400 times:

Well, ABC News is reporting as follows:

Quote:
Small shareholder group France Petits Porteurs called on EADS to return any executive share profits and said its leaders should either be sacked for not knowing what was happening inside the factories or jailed for insider trading.

Forgeard dismissed the growing furor and said he had nothing to fear from any inquiry into insider trading.

Insider trading carries a maximum prison sentence in France of two years and a fine of at least 1.5 million euros, stretching up to 10 times the illegal profits, said Jerome Herbert, a securities lawyer at Winston & Strawn in Paris.

Source:

http://abcnews.go.com/Business/wireStory?id=2083805&page=1

Later in that same article, it was stated as follows:

Quote:
Forgeard said he was among six senior EADS executives who had exercised options or sold stock up to March 17.

He said it was three days later on March 20 that he had learned that core shareholders Lagardere and DaimlerChrysler had decided to reduce their stakes, and in April that he first heard of A380 wiring snags.

I think it would be of interest to learn why the wiring issues only came up, or came to his attention, in April, rather than much earlier in the process.


User currently offlineLeskova From Germany, joined Oct 2003, 6075 posts, RR: 70
Reply 3, posted (8 years 2 months 2 weeks 2 days 15 hours ago) and read 2392 times:

Like with other people in the same situation, I'm willing to give him the benefit of doubt... but if there's even one bit of proof that he should have known about it at the point he sold his shares, he should be removed from his post immediately.

Over the years, he's done a lot of good work for Airbus - I would be highly disappointed if this were the part that's remembered about him... but if it's true, then that's what he deserves.

... aside from all possible legal problems arising from his misconduct, if, indeed, he violated laws.

Since BaFin is mentioned in the Flight article, I had a look at the relevant paragraphs, and while I'm no expert at these things, I was able to locate paragraph 14 WpHG (Gesetz über den Wertpapierhandel) defining insider trading, as well as paragraph 38 WpHG stating that someone guilty of violating paragraph 14 Abs. 1 Nr. 1 (buying/selling shares based on insider knowledge) will face up to 5 years in prison.

Would be interesting to know what the French legal system defines as punishment...

Here's the full WpGH text (in German): http://www.bafin.de/gesetze/wphg.htm

I certainly hope that Mr. Forgeard will not have to find out more about the details of German laws in this regard...



Smile - it confuses people!
User currently offlineAerospaceFan From , joined Dec 1969, posts, RR:
Reply 4, posted (8 years 2 months 2 weeks 2 days 15 hours ago) and read 2360 times:

Quoting Leskova (Reply 3):
Would be interesting to know what the French legal system defines as punishment...

Two years in prison and at least 1.5 million euros, up to ten times the amount of illegal profits, according to the ABC News article I cited above:

Quote:
Insider trading carries a maximum prison sentence in France of two years and a fine of at least 1.5 million euros, stretching up to 10 times the illegal profits, said Jerome Herbert, a securities lawyer at Winston & Strawn in Paris.

Source: Op. cit.

[Edited 2006-06-16 14:25:27]

User currently offlineDAYflyer From United States of America, joined Sep 2004, 3807 posts, RR: 3
Reply 5, posted (8 years 2 months 2 weeks 2 days 15 hours ago) and read 2307 times:

I wonder how much of this is playing into the problems with the A380 and 350 programs.


One Nation Under God
User currently offlineAerospaceFan From , joined Dec 1969, posts, RR:
Reply 6, posted (8 years 2 months 2 weeks 2 days 15 hours ago) and read 2294 times:

Quoting DAYflyer (Reply 5):
I wonder how much of this is playing into the problems with the A380 and 350 programs

That's an interesting question. The A350 wouldn't appear to be as challenging from a wiring standpoint, but it seems to me that there should be some independent technical inquiry, in addition to any legal, financial, or purely corporate investigations, as to why the design process for the A380 allowed the wiring issues to crop up so late in the game. Was this the subcontractor's doing? Was it an unforeseeable, or difficult-to-foresee, engineering issue? In any event, a similar mistake should be avoided in the future if at all possible.


User currently offlineDL021 From United States of America, joined May 2004, 11447 posts, RR: 75
Reply 7, posted (8 years 2 months 2 weeks 2 days 14 hours ago) and read 2222 times:
Support Airliners.net - become a First Class Member!

I wonder how this new controversy will affect EADS/Airbus internal management while they are sorting through this. Will Foergard be relieved of decision making responsibility while the investigation that will undoubtedly occur goes on? How about the others?

This looks very bad, since it's doubtful that anyone will be willing to believe that they did not know about the simmering issues since they're on top and get all the info prior to it being released to the rest of the world.

It's looking like it'll get ugly no matter what the legal results are.



Is my Pan Am ticket to the moon still good?
User currently offlineNAV20 From Australia, joined Nov 2003, 9909 posts, RR: 36
Reply 8, posted (8 years 2 months 2 weeks 2 days 14 hours ago) and read 2218 times:

Another story on the subject here. One bit of new information:-

"The French AMF financial market regulator on Friday issued a statement saying it has been inquiring into EADS for "several weeks." The "most recent events" will be included in this investigation into EADS share price moves, the regulator said."

http://www.marketwatch.com/News/Stor...4046-A6FE-38D5CD49DBDB%7D&keyword=

'Several weeks,' huh?



"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
User currently offlineSlider From United States of America, joined Feb 2004, 6799 posts, RR: 34
Reply 9, posted (8 years 2 months 2 weeks 2 days 9 hours ago) and read 2107 times:

I can't believe after all the frenzied posting this week about Airbus' woes that this topic isn't getting more play.

This is potentially huge.

Forgeard ditches shares, EADS isn't advised of any delays for the A380, then the delays are announced--reluctantly--the A350 program is mired in uncertainty, the stock takes a big dump consequently, and Forgeard is in the middle of some very dubious timing as to the divesting of his shares.

More then coincidental. And lest anyone think this is a A vs B, or American vs European thing, I'd say the same thing if it were an American CEO shitbag too.


User currently offlineFlyingDoctorWu From United States of America, joined Feb 2004, 307 posts, RR: 0
Reply 10, posted (8 years 2 months 2 weeks 2 days 9 hours ago) and read 2062 times:

Quote:
He said it was three days later on March 20 that he had learned that core shareholders Lagardere and DaimlerChrysler had decided to reduce their stakes, and in April that he first heard of A380 wiring snags.

So it looks like the CEO was notified in April of wiring snags.... when did they notify the Airlines...

It seems Emirates was kept in the dark until early June (this article if from June 13th.. right before the Fan was hit by the..)

Quote:
Mike Simon, Divisional Vice-President for Emirates Corporate Communications, however, said he did not expect the A380 delivery would be delayed further than the April 2007 deadline. Airbus originally wanted to deliver the planes about six months earlier.

Link

I think 2 months to inform your biggest customer is almost criminal... Airbus (and Boeing) need to be constantly in communication about the status of their order, especially a customer who has ordered 43 380 million dollar airplanes.


User currently offlineLeskova From Germany, joined Oct 2003, 6075 posts, RR: 70
Reply 11, posted (8 years 2 months 2 weeks 2 days 8 hours ago) and read 2029 times:

Quoting FlyingDoctorWu (Reply 10):
So it looks like the CEO was notified in April of wiring snags.... when did they notify the Airlines...

According to an article in Frankfurter Allgemeine, EADS was informed in April that there was a problem, but not of the extent; after informing EADS, Airbus had, according to a company spokesman, started analyzing the problems to find out how much impact it would have - and immediately after EADS was informed of the results, the airlines were as well; so, going by that article, I'd say EADS was notified a couple of days ago...

Here's a link to the article (sorry, only in German):
http://www.faz.net/d/invest/meldung.aspx?id=27863958



Smile - it confuses people!
User currently offlineAerospaceFan From , joined Dec 1969, posts, RR:
Reply 12, posted (8 years 2 months 2 weeks 2 days 8 hours ago) and read 2015 times:

Quoting Leskova (Reply 11):
According to an article in Frankfurter Allgemeine, EADS was informed in April that there was a problem, but not of the extent; after informing EADS, Airbus had, according to a company spokesman, started analyzing the problems to find out how much impact it would have - and immediately after EADS was informed of the results, the airlines were as well; so, going by that article, I'd say EADS was notified a couple of days ago...

In that case, it would be of interest whether the initial report was made in good faith, and also whether the various reports were reasonably accurate.

For example, if, hypothetically, the April report to EADS had been, "There is an issue with wiring; work is proceeding to determine extent"; and then two months later, the result was as it seems to be, then I think that, for one thing, it's question of fact as to what caused the initial report to begin with. It seems that the initial (April) report was not deemed important enough to provide it, or provide notice of it, to the airline-customers, if I'm reading the above correctly. The question I have is whether this was a reasonable choice.

How do things go from "not enough information to notify the airliners" to "bottleneck will cause six to seven month delay" in the space of two months?

Also, what happened in the intervening weeks from the initial April report through to the June "crisis"? Did top management keep tabs on the issue? Did it try to determine the possible severity of the problem? Did it consider issuing interim notices warning of the potential for a delay? Why or why not?

Who was minding the shop?

[Edited 2006-06-16 21:31:23]

User currently offlineDallasnewark From Estonia, joined Nov 2005, 495 posts, RR: 1
Reply 13, posted (8 years 2 months 2 weeks 2 days 8 hours ago) and read 1971 times:

Forgeard took a page out of Danny Kozlowski's book.
I'm not a psychic, but I see jail in his future



B732/3/4/5/6/7/8/9, B742/4, B752/3,B762/3/4, B772/3, A306, A318/9/20/21, A332/3, A343/6, MD80/83/88, L1011, TU104/134, F
User currently offlineTexfly101 From United States of America, joined Jan 2006, 351 posts, RR: 0
Reply 14, posted (8 years 2 months 2 weeks 2 days 6 hours ago) and read 1910 times:

It would appear to me that the problems that Airbus is facing were at least common knowledge to a lot of concerned parties prior to April. While not necessarily being made public, all the signs are there. Major stakeholders like BAE, Lagardere and DaimlerChrysler were reducing their shares and exposure early this year. Major execs were exercising their options, converting stock to money. Rumors of production problems and the consequent reassurances that everything was on track. And all this happening in the March timeframe, right before the April disclosures. So even if it is just a coincidence, which I have my doubts, just the taint of impropriety would deem a major mangement change. Phil Condit sure found out about this. Boeing is still trying to recover from their own set of management ethics scandals under his watch. Their EELV, KC767, and C-130 electronics contracts to name a few, all suffered from this and management heads rolled as a consequence. There is already a call for France's AMF and Germany's BAFIN to investigate the stock sales and timing. EADS has started their own investigation into the problems at Airbus. BAE is having to have an outside regulator determine the sale share price. And everyone is dumping the stock. So this is just the tip of the iceberg, it could be a really rocky couple of years. It will really be interesting to see how a call for full development money of $10-12 billion for the A370 will fall on governmental ears while EADS/Airbus is under tainted leadership. That alone might mean a management change, Mr. Forgeard's refusal to resign notwithstanding. Giving that much money to them might not sit very pretty with the opposition parties in the affected countries. Senator McCain sure made presidential hay in his accusations of Boeing malfeasance and investigations into thier business practices.
The Rueter's article discusses the EADS/Airbus items, its dated 6/16/06 and makes good reading.


User currently offlineRheinbote From Germany, joined May 2006, 1968 posts, RR: 52
Reply 15, posted (8 years 2 months 2 weeks 2 days 6 hours ago) and read 1895 times:

Quoting FlyingDoctorWu (Reply 10):
So it looks like the CEO was notified in April of wiring snags.... when did they notify the Airlines...

It seems Emirates was kept in the dark until early June (this article if from June 13th.. right before the Fan was hit by the..)

Well, nowadays customer airlines seem to deploy a number of engineers with the manufacturer, either to support the design teams or to supervise integration work. Customer airlines should have been pretty much abreast of the situation at any time.


User currently offlineRIXrat From United States of America, joined Nov 2005, 788 posts, RR: 0
Reply 16, posted (8 years 2 months 2 weeks 2 days 6 hours ago) and read 1859 times:

As posted in another forum, here is the International Herald Tribune's take on Mr. Forgeard, his children and his associates, regarding the EADS stock sale:

http://www.iht.com/articles/2006/06/16/business/airbus.php


User currently offlineSpartanmjf From United States of America, joined Nov 2005, 500 posts, RR: 0
Reply 17, posted (8 years 2 months 2 weeks 2 days 6 hours ago) and read 1820 times:

To suggest that the corporate parent wasn't aware of the extent of a manufacturing issue on a signature project as visible as the A380 is almost laughable.

The A380 represents a MASSIVE investment of financial, techincal, and human capital and, given the previous delay situation, EADS should have known and Airbus should have been in constant communication with EADS.

This is, at the least, a significant breakdown in management structure and communication.

At the most, if these reports of stock trading are true, it could involve criminal behavior on the part of multiple individuals.

Martha Stewart and her crowd got into trouble for stock issues involving a far lower profile situation and less money.



"Nuts to the man in 21D!"
User currently offlineBigSky123 From Slovenia, joined Dec 2005, 149 posts, RR: 0
Reply 18, posted (8 years 2 months 2 weeks 2 days 5 hours ago) and read 1807 times:

FlightGlobal has an interesting transcript of an interview with Forgeard regarding the delay:

http://www.flightglobal.com/Articles...ck+on+French+radio+transcript.html

Why is he saying 152 a380s "have been sold"? Are the other 7 orders still waiting to be finalised or where did the remaining 7 frames go?

[Edited 2006-06-17 00:05:12]

Top Of Page
Forum Index

This topic is archived and can not be replied to any more.

Printer friendly format

Similar topics:More similar topics...
Suit Accuses NWA Officials Of Insider Trading posted Wed Dec 21 2005 23:31:34 by AMFAproud
Insider Trading At Eads posted Wed Dec 6 2006 22:49:20 by Rigo
Iberia Accused Of Discrimination In Peru posted Tue Nov 28 2006 09:22:42 by KLM685
Qantas Accused Of Being A "Stalinist Regime" posted Mon Nov 6 2006 07:33:10 by Singapore_Air
HA: YV Accused Of Conspiring To Oust AQ posted Sat Sep 16 2006 17:38:57 by Kalakaua
Lawyer Claims Wider Insider Trading At EADS posted Wed Jul 12 2006 14:38:37 by RAPCON
Office Of Fair Trading To Probe British Airports. posted Fri Jun 30 2006 12:41:39 by Drinkstrolley
AA, BA, VS UA Accused Of Price Fixing! posted Tue Jun 27 2006 15:08:15 by NWDC10
Ryanair Accused Of Landing Below Minimums posted Mon May 1 2006 19:46:06 by Westindian425
Report: Qatar Airways Staffer Accused Of Racism posted Sat Apr 22 2006 10:19:17 by PlaneHunter