Societe Generale Board Member Sold Shares on Jan. 18

Societe Generale Board Member Sold Shares on Jan. 18 (Update3)

By Gregory Viscusi and Heather Smith

Jan. 29 (Bloomberg) -- Societe Generale SA board member Robert Day and his foundations sold shares of the bank worth 45 million euros ($67 million) on Jan. 18, the day it said management discovered trading frauds costing 4.9 billion euros.

Day's sales totaled 40.5 million euros for himself and 4.5 million euros for the Robert A. Day Foundation, France's market regulator, the Autorite des Marches Financiers, said in two statements on its Web site.

These sales bring to 140 million euros the amount of shares in Societe Generale that Day or his foundations have sold since the start of the month.

``The AMF has opened an investigation into Societe Generale,'' Christine Anglade, a spokeswoman for the regulator, said today. She declined to say what the AMF was looking into at the bank.

Paris-based Societe Generale delayed an announcement about a 2.05 billion-euro writedown linked to the U.S. subprime mortgage market to Jan. 24 from Jan. 21 after discovering that trader Jerome Kerviel had secretly set up positions that resulted in losses of 4.9 billion euros as they were unwound over the next three days.

Josh Pekarsky, a spokesman for Day, said ``no inside information was used in any way with respect to these sales,'' in an e-mailed statement yesterday. Day still owns approximately 1.9 million shares in Societe Generale. Pekarsky declined to comment further today.

Shareholder Activists

Colette Neuville, chairwoman of ADAM, the Chartres, France- based shareholder activist association, filed a request with the AMF to launch an investigation into Societe Generale for insider trading, failure to disclose the extent of its subprime losses, and how it accounted for the losses attributed to resolving Kerviel's positions

In addition to the shares sold by Day this month, Neuville cited a November 2007 letter to investors from Societe Generale Chief Financial Officer Frederic Oudea estimating the bank's subprime loss at 230 million euros.

``Shareholders who put their trust in these reassuring statements were clearly led astray,'' Neuville said in the letter to the AMF.

Lawsuit

A group of individual and company investors yesterday filed a suit against unnamed people at the bank alleging insider trading, their lawyer Frederik-Karel Canoy said.

Societe Generale did not inform board members when ``additional subprime-related writedowns or reserves would be made. Such writedowns and reserves were presented to the board for the first time on January 20, 2008,'' Laura Schalk, a spokeswoman for Societe Generale, said in a statement. Day ``has pledged his cooperation into any inquiries,'' she said.

Societe Generale bought control of Los Angeles-based fund management company TCW Group Inc., where Day was chief executive officer, in 2001 for $1.3 billion in stock. Day is 297th on Forbes Magazine's list of the wealthiest people in the U.S. with an estimated worth of $1.6 billion.