Former SocGen banker charged in insider case

Bloomberg

A former Societe Generale SA managing director was charged in a French insider-trading case linked to Air Liquide SA’s $13.2 billion takeover of Stephane Fima, a managing director who specialized in acquisition financing, was charged by an investigative judge following raids last year at the bank’s headquarters in the La Defense business district in western Paris. The criminal charges were disclosed at an employment tribunal, where Fima is suing for unfair dismissal and a bonus for the year before he was fired.
Criminal charges related to insider trading are rare in France, where the offense is most often dealt with as a civil violation by the country’s financial markets regulator. Authorities around the globe have cracked down on the crime since the global financial crisis, with U.K. prosecutors obtaining more than 30 convictions since 2009.
Fima’s lawyer at the employment tribunal, Frederic Gras, said his client was fired in April 2016, nearly three months after the raids and was later charged by an investigative judge in a process known as “mise en examen” triggered when there is serious and consistent evidence showing likely involvement.
Gras declined to comment on the criminal case Friday, and referred calls to Fima’s criminal lawyer who didn’t immediately respond to requests for
comment.

Codename Sangria
Societe Generale’s dismissal letter states it was informed by investigators that Fima had disclosed information about the Air Liquide deal to a third party in exchange for a payment, suggesting possible insider trading, Gras said at the hearing.
Fima accessed two documents, including a credit application that used the deal’s “Sangria” codename and that had a stamp on all but one page indicating the project was covered by the highest level of confidentiality, Dominique Santacru, a lawyer for Societe Generale, said at the hearing, without naming the acquirer or the target directly.
Fima, a 17-year veteran of the bank, told the tribunal that he accessed the information, but denied taking part in insider trading. He said that he was interested in seeing the data on Air Liquide, a one-time client.
Santacru said Fima was told the matter was confidential after he found out “by chance” in November 2015 that a deal might be taking place.

Must Not Get Out
“The information must not get out. Don’t speak about it to anyone,” Fima’s boss, the head of strategic & acquisition finance in France, told him according to Santacru.
Fima’s attorney, Gras, sought to shift the blame onto the bank for failing to encrypt the documents properly, making them easily accessible to Fima.
“If you don’t put weapons in a safe you shouldn’t be surprised if someone takes them,” the lawyer said.
Santacru explained that the documents were meant to be encrypted, but the employee in charge of that task was sick.
“When I see a gun laying around I don’t grab it and start shooting everyone,” the Societe Generale attorney said.
Gras said that the facts for which Societe Generale fired his client should not have led to such a harsh measure and were, in any case, taken too late because the bank should have acted within two months of learning of the alleged infringements according to French employment laws.
He cited the case of Jerome Kerviel, who was convicted of causing a record trading loss of 4.9 billion euros ($5.5 billion) at Societe Generale, managed to win last year more than half a million dollars in compensation after the Paris employment tribunal judge berated the lender for turning a blind eye for months to his trading antics.
Gras also said the Societe Generale should have paid Fima a 130,000-euro bonus for 2015 in line with the praise he got in annual review that year.
“Fima made a mistake: he was nosy and sought information about Air Liquide. He never denied that,” Gras said. “It’s understandable that the bank punishes Fima but not for gross misconduct. I consider that measure disproportionate.”
The Paris employment tribunal is set to issue a ruling on Sept. 20.