After three years of investigation, the French financial market regulator AMF cleared Airbus' parent EADS executives of insider trading in a multimillion-dollar scandal on Thursday.
Small shareholders, shocked and isappointed, on Friday regretted the AMF decision, calling it a "scandal" and complaining that the AMF was only
an administrative organ.
Seventeen current and former executives of the European Aeronautic Defense and Space Company were accused of using knowledge of production
delays for an A380 program to sell and swap shares between November 2005 and March 2006 well before the information was made public.
In an official statement, AMF Sanctions Committee said that the information those executives acquired about the A380 problems does not constitute inside information, therefore the disputed stock transactions are not considered insider trading.
"The accusation concerning use of privileged information must be dropped," said the committee.
The EADS shareholders Lagardere SCA and Daimler AG, which had been involved in the case, were also cleared of the charge.
EADS said that it welcomed the decision to dismiss all charges and hoped that this point of view would apply to other pending proceedings based on the same facts.
Although criminal process was still underway, the committee's decision came as good news for those EADS executives who were said to face a fine of 11.6 million euros (16.6 million U.S. dollars) in a July report. Among them,
the former EADS head Noel Forgeard alone was expected to be fined 5.45 million euros (7.8 million dollars).
In May 2008, Forgeard was ordered to pay 1 million euros (about 1.4 million dollars) in bail after being formally charged in connection with the scandal.
In response to EADS' decision, the French Small Shareholders Association (Appac) complained that if this case was not defined as insider
trading, then the definition of the term should be modified.
The association said the decision made them feel "uncomfortable" and "unfair."
The AMF investigation, launched on June 16, 2006, was prompted by the suspected massive insider trading before EADS's official announcement of a delay in A380 program, which sharply brought down its share price by 26
percent in one day and dragged the company into months of management troubles.
Legal professionals said that the current result was not the end of EADS's legal trouble nightmares.
For AMF, the case represents largely a test of its capacity to conduct large-scale investigations and bring justice to minority shareholders.
Regardless of the result, the market authority promised to strengthen its supervision over French financial market and improve transparency of proceedings, while battling a government proposed reform to limit its
investigation power.
Local analysts said that this case would also give a push to the French government to end soon its long-winded debate over the introduction of shareholder class action for the sake of minority shareholders.