Sales of French bank stock eyed

The U.S. Justice Department is looking into stock sales by an American member of French bank Societe Generale’s board shortly before it announced billions of dollars in losses attributed to a single trader, according to a person close to the investigation.

The director, Robert A. Day, founder of Los Angeles-based Trust Co. of the West, has denied any wrongdoing.

“No inside information was used in any way with respect to these sales,” Josh Pekarsky, a spokesman for Day, said Monday in an e-mailed statement. “Mr. Day has pledged his cooperation into any inquiries of this matter.”

The Securities and Exchange Commission is also probing stock sales by Day and by two foundations associated with him, the Wall Street Journal reported on its website Monday.

Day and the foundations sold about $140 million worth of the bank’s stock about two weeks before the bank notified its board of $7.3 billion in trading losses, the Journal said, citing unidentified people with the matter.

Societe Generale publicly revealed the huge trading losses Jan. 24 and blamed them on an employee it described as a rogue trader.

Day became a Societe Generale director after the French company bought TCW in 2001.

The bank has already said Day’s sales were proper and weren’t based on inside information.

The bank said Monday that its New York branch was contacted Jan. 25 by the U.S. attorney’s office in Brooklyn regarding the trading losses it announced Jan. 24.

“The bank is cooperating fully with the investigation,” Societe Generale said in an e-mailed statement.

Two sets of small shareholders have filed a complaint about the trades alleging insider trading.