French regulators yesterday recommended that executives at Airbus and parent EADS face insider trading penalties linked to costly delays of the A380 superjumbo and said the company had misled markets.
Stock market regulator AMF said it would report evidence of insider trading to its own sanctions experts and to prosecutors who will be able to grill senior EADS officials over events stretching back to 2005.
EADS defended its record on transparency and vowed to support its managers but warned the probe could have "significant consequences on its image and reputation".
The AMF issued a brief summary of its conclusions following a probe which threatens to reopen chronic management and political battles surrounding Europe's largest aerospace group.
The investigation was triggered by worsening delays to production of the A380 superjumbo, which sliced a quarter off EADS stock in June 2006.
Top shareholders Lagardere and Daimler and several managers sold shares beforehand but deny doing so with the knowledge that A380 problems were worse than feared.
The AMF said its investigation into suspicions of market manipulation had also taken it back through company statements issued as far back as May 2005.
The findings do not imply guilt, but the AMF will send its conclusions to an internal sanctions committee that will then give the unnamed suspects a chance to defend themselves before it decides whether to recommend financial penalties.
The AMF said it had also decided to hand its findings "without delay" to Paris prosecutors.
"At last, EADS and its managers concerned will be in a position to defend themselves," EADS chief executive officer Louis Gallois said in a statement.
"EADS will support its managers in their defence, it intends to demonstrate that it has applied standards of excellence when communicating to the market and has acted with full transparency."
EADS shares fell before rising 1.6 per cent to €15.25. The company said it did not expect a material financial impact from the probe but warned the next step in the process could take a long time.
The company declined comment on a report that the AMF had decided to report 17 individuals to its sanctions panel out of 21 originally targeted in the probe.
French media firm Lagardere said the AMF had made no accusation against the group relating to the A380 delays.
But it acknowledged being challenged over a discrepancy between analyst forecasts and internal operating targets as well as delays in announcing a redesign of another jet, the A350.
"The group is confident of its ability to provide all explanations needed to clear it," Lagardere said in a statement.
Daimler reiterated that it did not trade on inside information.
The AMF's most extensive investigation to date is seen as a test both of the regulator's powers and credibility and of the stability of EADS, rocked in the past by management disputes.
Power at the company, founded in 2000, was originally shared between French and German executives in a testy dual management structure that Paris and Berlin abolished at a summit last July.
Mr Gallois said in a newspaper interview last week that the inquiry could have "serious consequences" for EADS.
EADS is battling to keep a restructuring plan on track in the face of a weak dollar and recently won a $35 billion deal to supply mid-air refuelling planes to the US Air Force.
Rival Boeing and its backers in Congress are questioning the validity of the contract and are likely to leap on anything implying shady dealings at EADS, after an earlier contract to Boeing was cancelled in a corruption scandal.