French Societe Generale Sued by Shareholders
French lawyer Frederik-Karel Canoy is representing 100 small shareholders who are suing French Societe Generale over the way it unbundled billions of dollars in allegedly fraudulent share deals earlier this week.
Mr. Canoy on Monday said the bank should have informed markets about its pending losses before embarking on a massive selling spree on Monday to Wednesday to unwind the 50 billion euros of uncovered futures positions built up by trader Jerome Kerviel.
Canoy reported that he also filed a separate complaint about the sale of a million shares by a SocGen director of shares on January 9 and 10, disclosed in a filing.
Both complaints allege insider dealing and market manipulation, he said.
On Friday, French bank Societe Generale had announced that it uncovered "massive" fraud by a Paris-based trader which resulted in a loss of 4.9bn euros ($7.1bn; £3.7bn).The bank had said that the fraud was based on simple transactions, but concealed by "sophisticated and varied techniques".
A SocGen spokeswoman said the director, Robert A. Day, had sold shares "well before" the bank became aware of alleged fraud carried out by one of its traders, leading to heavy losses.
Canoy is already suing SocGen for negligence over the fraud.
Published on January 28, 2008
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