France to use intelligence agency in rumor crackdown

PARIS Fri May 7, 2010 5:41pm BST

PARIS (Reuters) - French financial authorities will work with intelligence services to crack down on speculators seeking to profit from the debt crisis by spreading unfounded rumors, the head of the AMF markets watchdog said on Friday.

"We are in a period when rumors are affecting the security of states, the credibility of the euro zone," AMF president Jean-Pierre Jouyet told I-Tele television.

He said market authorities would use all the means at their disposal and would work with the DCRI, a domestic intelligence service that normally handles cases of counter espionage and cybercrime.

If necessary, investigators would look at "everything which might have been exchanged in the form of emails, text messages, anything which might have been put up on internal bulletin boards at banks or funds," he said.

"If it turns out that certain baseless rumors...are not backed up by...any rigorous analysis, I do not doubt that there will be sanctions against the operators," he said.

The comments, which follow similar remarks on Thursday by Economy Minister Christine Lagarde, add to a growing chorus of condemnation in Europe of what many politicians have described as speculative attacks against the euro on financial markets.

On Thursday, markets were roiled by talk of an imminent downgrade on Italy, the euro zone's third-largest economy.

The spread between Italian and German benchmark 10-year bonds widened to 130 basis points after rumors that Standard & Poor's was preparing to cut its rating on Italy. The agency later reiterated its stable outlook for the country.

Jouyet said it would be particularly scandalous if it emerged that banks which had benefited from state support following the financial crisis of 2008 had been involved in dubious speculative operations against the euro.

"If it turns out to be institutions helped by the state -- something that I can scarcely imagine -- it would be a pure scandal," he said.

(Reporting by Laure Bretton; writing by James Mackenzie;editing by Ian Jones)

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