German software titan SAP today downplayed an insider trading investigation being conducted by German securities regulators.
Kevin McKay, chief operating officer of SAP's America unit, said he and other top SAP executives are confident that none of their employees have broken the law and that the company will be cleared of any wrongdoing.
The investigation centers on one day of trading last fall, when the price of SAP's stock on the Frankfurt Stock Exchange dropped dramatically. That day, October 22, 1996, the company posted $1.6 billion in sales for the nine months ending September 30, a 33 percent increase over the same period a year earlier.
But it was less than financial analysts expected and sent the stock price plummeting by 20 percent, the company said.
The plunge prompted German investigators to look into whether SAP employees who were privy to the results before the official announcement might have engaged in insider trading.
The share price went on to recover by the end of the calendar year, McKay said. The stock closed yesterday on the Frankfurt exchange at 319.8 DS, or $185 a share.
McKay attributed the price changes to normal volatility associated with high tech stocks. Since SAP is one of the few public software developers in Germany, the company has attracted the attention of German regulators who are looking to crack down on insider trading, he maintained.
The German government is working to reform its financial markets in a move to improve its competitiveness with neighboring countries as the region moves toward a common European currency, to be called the euro, by early 1999. McKay said the investigation is closely tied to reform efforts.
"There is a lot of notoriety that goes with being SAP," he said. "There is really no other place to look because there is not another high-tech company with high volatility" trading on the German exchange, McKay added.
The company said the case, which is being handled by investigators from the Frankfurt Public Prosecutor's Office, could take as long as a year to resolve. SAP has supplied authorities with the names of about 100 directors, managers, and other employees who were privy to the company's worldwide results before the company reported to the stock exchange on October 22 last year.
McKay said the company has turned over telephone logs and other information, but he denied reports published in the German press that investigators had visited SAP's Walldorf headquarters and seized documents.