The investigation into the Societe Generale sell-off looks like it could quickly descend into farce.
Over the weekend Le Monde was forced to defend itself — in a front page comment no less — against accusations that a 12-part fictional series titled, ‘End of the Line for the Euro‘, was in fact responsible for the false rumours that drove down the SocGen share price last week.
Victime, cette semaine, d’une folle rumeur sur sa santé financière, la Société générale a réagi vigoureusement et sereinement. Elle a décroché, très vite, un démenti formel du premier émetteur de cette rumeur, le Mail on Sunday.
Elle a obtenu, très vite aussi, l’ouverture d’une enquête auprès de l’Autorité des marchés financiers pour que soient déterminées les origines de cette rumeur. Mis en cause, Le Monde ne peut que se réjouir de cette investigation. Certains de nos confrères ont en effet cherché à accréditer l’idée que la fiction politico-financière “Terminus pour l’euro” que nous avons publiée, comme série d’été, du 26 juillet au 6août, serait à l’origine de cette rumeur. Le ministre de l’économie, François Baroin, a d’ailleurs repris l’argument à son compte vendredi 12 août sur RTL…
The allegation here is that Le Monde’s fictional story, which, shock horror, named real French banks, was in fact the source for the Mail on Sunday’s now infamous (and retracted) claim that SocGen was in a ‘perilous’ state and possibly on the ‘brink of disaster’.
The New York Times takes up the story:
Readers of the fictional “End of the Line for the Euro” noticed that Société Générale and UniCredit were both named in the same passage in the series, in an imaginary conversation involving the hedge fund manager John Paulson, where he says that U.S. regulators have been raising concerns about the liquidity of the two banks.
On Wednesday, a journalist at the Reuters news agency, Natalie Huet, speculated about a possibility of a link between the tale in Le Monde and the story in The Mail on Sunday.
“The rumor of a collapse of SocGen could have come from a misreading of the summer series in Le Monde by The Daily Mail,” she wrote on the blogging site Twitter, referring to the weekday sister publication of The Mail on Sunday.
Something the Mail on Sunday, we understand, denies.
So Le Monde, a British tabloid and Reuters involved in the rumourmongering. Anyone else?
The story took off from there. On Thursday, the news agency Agence France-Presse asserted, in an article that it later killed, that the Le Monde series “was the source of false information that has largely contributed to Société Générale’s stock market drop.”
On Friday, the French economy minister, François Baroin, discussed the possible connection in a radio interview.
By the weekend, the talk had grown so loud that Le Monde was moved to defend itself in a front-page editorial by Erik Izraelewicz, its top editorial executive.
What a muddle. And this just demonstrates the sheer stupidity of trying to pin last week’s share price fall on any one rumour or person. (Note that CNBC continues to blame FT Alphaville’s GOFO post for the sell-off).
Something the UK’s FSA knows only too well. Its HBOS rumour investigation in 2008 came to the following unsurprising conclusion:
Despite the likelihood that the rumours contributed to the fall in the share price, the FSA has not uncovered evidence that they were spread as part of a concerted attempt by individuals to profit by manipulating the share price.
And what’s the betting that France’s AMF reaches the same conclusion? Yes, there was speculation, but there wasn’t a concerted bear raid on SocGen.
Anyway, FT Alphaville exclusively understands that the AMF has its top man on the case…