(Bloomberg) —
The two main suspects in France’s biggest insider-trading probe are edging closer to nixing the entire case after an adviser to European Union judges suggested that their privacy rights were violated by investigators to obtain key evidence.
Traders Alexis Kuperfis and Lucien Selce have been charged in France for making some 20 million euros ($23 million) in suspicious transactions. They deny the accusations and have been trying to overturn the charges by saying investigators overstepped their authority.
An EU court advocate general agreed, saying Thursday that investigators improperly accessed the detailed phone records of the two suspects. He criticized French law at the time for failing to guarantee their privacy rights.
While Manuel Campos Sanchez-Bordona’s advice to judges at the EU Court of Justice is non-binding, a ruling potentially hampering the French case could follow within the next six months.
The guidance comes after France’s top court questioned last year whether evidence used to tap the burner phone of a banker indirectly passing confidential merger tips to traders was obtained illegally.
Rather than throwing out the case, the French court referred the matter to the EU tribunal to decide whether the failings can be overlooked.
Burner Phone Unlocked Insider Trading Web — and May Doom Probe
Sanchez-Bordona said that national legislation forcing telecommunications companies to store phone data on a “general and indiscriminate basis” for the purpose of an insider-trading probe — as was the case in France — is contrary to EU law.
He added that national courts, such as France’s top court, can’t limit in time the effects of that incompatibility.
Frédéric Peltier, a lawyer for Selce, said that the advocate general’s opinion suggests the investigative acts carried out by officials at France’s stock-market regulator “were illegal.” An attorney for Kuperfis didn’t immediately respond to a request for comment.
At least seven other people have been charged in the Kuperfis and Selce probe, including former bankers at Merrill Lynch and Societe Generale SA.
EU judges are weighing two other separate cases that also question investigators’ and telecommunications companies’ rights to store and access personal phone or internet data.
One of the cases led to the conviction in Ireland of a man in a murder case. The third case stems from a challenge by companies, including SpaceNet AG, a German Internet provider for businesses, over the validity of rules on the storage periods of traffic and location data.
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