SBC confirms its involvement in Eurotunnel controversy

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The Independent Online
Swiss Bank Corporation confirmed last night that it was one of the two banks involved in the widening controversy over insider dealing in Eurotunnel shares on the Paris Bourse, but denied any improprieties.

SBC issued a statement saying it "vigorously denies any improper conduct in connection with the Eurotunnel capital increase".

Earlier in the day the bank had declined comment as rumours swept the French exchange that both it and the US investment bank Salomon Brothers had been questioned by the markets watchdog, the COB, and the police.

The COB had reportedly told the French press that it intended to fine two unnamed financial institutions for share-dealing irregularities in the run-up to Eurotunnel's pounds 858m rights issue last year.

A Salomon spokesman in London said the company was aware of the investigation and was co-operating. Both companies denied any wrongdoing.

Earlier in the day Deutsche Morgan Grenfell denied that it had been sanctioned for any improper share dealing. Banque Indosuez also denied it was facing censure.

The COB, after a six-month investigation that involved cooperation from the London Stock Exchange and authorities in the US, has sent a report to the public prosecutor's office alleging insider trading by two banks. They were not named.

Investigators examined 70 per cent of the share transactions between 1 January and 25 May last year. Eurotunnel announced its rights issue on 26 May. The transactions were said to total about Fr575m (pounds 74m) involved in the underwriting of the issue.

There were 13 lead underwriters, as well as many sub-underwriters, to the rights issue, which was an important part of Eurotunnel's financial restructuring.

Eurotunnel, chaired by Sir Alastair Morton, had become concerned that dealers were selling short in advance of the rights issue to depress the share price. It carried out its own investigation, but ran up against French laws which prevented it getting the necessary financial information. The company sent what information it had to the French prosecutor's office.