Police raid French market regulator

IN an extraordinary move, the French stock market regulator was raided last night by police probing the alleged illegal share buy-back by Vivendi Universal under disgraced former chief Jean-Marie Messier.

The Financial Markets Authority said it co-operated fully during the operation, which was supervised by the two investigating magistrates leading the Vivendi probe.

APPAC, a shareholder's group that filed the original complaint against Vivendi two years ago, has accused the regulator of complicity in an illegal share buyback launched days after the 11 September attacks in the United States.

'If he [Messier] hadn't carried out this operation to maintain the price, small investors would not have continued to buy the shares,' said APPAC president Didier Cornardeau.

The Financial Markets Authority has acknowledged that its president, Michel Prada, wrote to Messier in October that year saying he would take no action against Vivendi, despite breaches of share buyback rules.

The watchdog said this was because of the 'exceptional nature' of the period after the 11 September attacks.

Messier this week accepted responsibility for the scheme and asked to be placed under investigation along with his former colleagues, but he defended the operation, insisting it had been 'in the interest of shareholders'.

APPAC maintains Messier's actions deceived investors and lost money. Prosecutors last night said they had also detained but later released two Deutsche Bank executives who were involved in the share re-purchase scheme.