Swiss banker bid to keep trip private exposes insider-trading case

[PARIS] A Geneva financier's battle not to disclose details about trips to a luxury Alpine ski resort and the sun-splashed island of Corsica revealed that he faces criminal insider-trading charges.

Lucien Selce, Vista Capital Management SA's co-founder, was charged by a French investigative judge as part of a probe into the trading of shares of CGG SA in 2014 and 2015.

Little is known about the case, however, because prosecutors haven't publicly announced the investigation.

The charges were revealed by Selce's lawyer at a hearing in France's Constitutional Court last week as he fought to keep the travel from market regulators.

In a country where insider trading is typically a civil offence, Selce's is the second criminal case to be revealed in unrelated court proceedings within the last few weeks.

Charges against a former Societe Generale SA managing director were discussed at an employment tribunal hearing in June at which he sought a bonus payment from the bank.

Selce is contesting methods investigators used to locate him with phone-bill records. That improperly infringed on his private life, his lawyer, Frederic Peltier, told the court.

Selce "doesn't want it to be known that he regularly goes to Megeve and Porto Vecchio, particularly given that the trading he's been blamed for took place in Switzerland," Mr Peltier, told the Conseil Constitutionnel at the hearing. "It has nothing to do with the investigation, but it bothers my client for personal reasons I won't detail."

Mr Peltier declined to comment when contacted by phone on Tuesday. Officials at CGG and the French financial prosecutors office also declined to comment. Selce didn't return calls and emails.

CCG FLUCTUATIONS

CGG fluctuated over the period Selce allegedly made the transactions, with shares rising on a November 2014 report that the surveyor of oil and natural-gas fields was weighing a sale to Technip SA. Less than a month later, CGG shares slumped as much as 38 per cent after Technip halted its bid. CGG then surged as much as 12 per cent in Paris trading in February 2015, when the company's CEO refused to rule out the merger.

Mr Peltier told the court that the case concerning Selce was separated from "a very large criminal probe that concerns several securities" by the investigative judge in order to focus solely on trading of CGG shares.

He said his client had been formally charged in a process known as "mise en examen" triggered when there is serious and consistent evidence showing likely involvement.

SWISS PROSECUTOR

French authorities turned to Switzerland's top prosecutor for help in the case. The Swiss Federal Office of Justice in Bern said in an email that it received a request for legal assistance from France and the Office of the Attorney General is currently working on it. The Swiss Attorney General's office said it isn't leading its own investigation.

Geneva-based Vista Capital Management provides asset management services, financial engineering and structured financing. That includes creating offshore firms or trusts for tax optimization purposes as well as equity investment in listed undervalued or distressed companies, according to the company's website.

Selce's bio on the firm's website says he has more than 15 years of investment banking expertise, including work at Cargill Financial Markets Plc and consulting for a Barclays Plc unit. The French citizen is also chairman of Arbel SA and on the board of Selcodis SA.

The charges came to light last week as Selce's lawyer intervened as an interested party in an unrelated constitutional court case where two men challenged the investigative methods used by France's market regulator in civil probes.

FINING POWERS

Mr Peltier told the constitutional court that officials at the Autorite des Marches Financiers - which has the power to issue administrative fines for market offenses - sent a note to the investigative judge saying they had identified Selce as the user of a phone registered under the name of one of his employees, and that the phone was used in Megeve and Porto Vecchio.

"The AMF is using its power to request detailed phone records and use them despite having no need to investigate given that it couldn't carry out proceedings" as the case was run by criminal authorities, Mr Peltier said, adding that AMF officials acted on their own initiative, without getting instructions from the investigative judge.

The information the AMF collected "could very well have been requested by the investigative judge with a letter of request that we would have been able to contest and over which we would have had some control," Selce's lawyer said.

"These phone records were then used as incriminating evidence against my client even though my client has no way to contest their use by the AMF and its right to request them. That creates a very big procedural problem."

Mr Peltier said Selce wanted to avoid being known for frequenting the resort towns. "That's the reason why my client asked me to intervene in this procedure to show how harmful the power of the AMF can be if it has no limits," he said.

SEC SUBPOENA

Selce used similar arguments about privacy and jurisdiction issues to fight a US Securities and Exchange Commission subpoena in 2014 issued as part of a probe into energy company GDF Suez.

The SEC eventually dropped the request for information about his Google gmail account, which Selce had called "extraordinarily invasive." Loic Henriot, a lawyer for one of the two men in the civil case, told the court last week that an overhaul of existing rules - dating back to the turn of the century - to protect privacy rights in AMF investigations is long overdue given how technology has evolved.

"The iPhone didn't even exist in 2001," Mr Henriot said. He added that once AMF officials have sent the data collected to French prosecutors, it can be forwarded to certain authorities in other countries "without any limitation."

Mr Henriot declined to comment after the hearing, other than to emphasise that his client isn't involved in the CCG criminal case. The other man's lawyer, Francois Molinie, declined to comment, as did the AMF.

Claude Nicole Ohl, a lawyer for the AMF, told the court that any order against the regulator would jeopardise more than 40 cases where the suspects may have illegally pocketed 80 million euros (S$125.4 million) through insider trading.

The constitutional court is set to rule on July 21.

BLOOMBERG