In a novel twist on insider trading probes, French authorities are investigating a network that allegedly tried to court elite university students and junior bankers, betting they’d one day land top finance jobs and hand over market-moving intelligence.
 
One of those students would later work for Rothschild & Co. on a secret €2 billion ($2.3 billion) plan by luxury billionaire Bernard Arnault to delist Christian Dior — a deal that never surfaced publicly but still triggered suspicious trades in Paris, Dubai and New York, according to confidential investigative documents.
 
Authorities say that the relationship between the alleged tipster and the network that recruited him began years earlier, while he was still a student at HEC Paris, one of France’s most prestigious business schools. The group allegedly offered housing help, career advice and even tips on his appearance. Investigators believe they were cultivating a future source deep inside the finance world.
 
French authorities also allege he may have shared details of an M&A deal that’s under investigation in the US as part of a clampdown on a cross-continent insider ring that allegedly made more than $17 million in illicit gains.
 
What sets the Dior case apart is how early the attempted recruitment began, at times before the targets had actual access to insider information. French investigators allege the networks similarly approached an M&A intern who was carrying out a dual master’s degree and at least four young finance professionals at Rothschild, JPMorgan Chase, Lazard, and HSBC Holdings between 2016 and 2018. They all appear to have declined to provide insider tips, according to authorities.
 
Read more: Insider Trade Ring Born at Paris Lunch Made $17 Million, US Says
 
The live French investigation comes as the country’s stock-market and anti-corruption watchdogs raised the alarm this month about networks linked to organized crime that repeatedly seek to obtain insider tips by offering money, gifts or perks.
 
The Autorité des Marchés Financiers, which initiated the Dior inquiry about five years ago, said those particularly at risk ranged from investment bankers and lawyers to staffers in finance, M&A and even IT departments at listed companies.
 
The case is now in the hands of prosecutors at the Parquet National Financier. They are working with a law enforcement unit known as the section de recherches de Paris of the gendarmerie, in a bid to boost France’s enforcement record against insider dealing. All agencies declined to comment.
 
The alleged Dior tipster left Rothschild about half a decade ago although he remains in the financial industry as the case continues with no criminal charges made against him or trial ordered. He denied wrongdoing through a lawyer but declined to comment further.
 
Rothschild said by email that it “was never aware of any such alleged conduct when this banker was on staff.” Dior, which isn’t suspected of any wrongdoing, declined to comment.
 
Some suspicious Dior transactions were traced by French authorities to individuals and entities connected to the group of four believed to have enlisted the alleged tipster.
 
Other trades led to two relatives tied to a separate insider investigation. Their audio messages suggest they tried, and failed, to move the Dior share price by sharing the deal tip with reporters. As a result, overall suspicious profits remained relatively modest, around €400,000 in total.
 
Read more: Ex-Merrill Banker Turned M&A Pro Caught Up in Insider Tips Case
 
Still just a 21-year-old master’s student, the future Rothschild banker was already eyeing a career in M&A when first introduced in 2016 to the group by the son of a rich Syrian family.
 
After that first meeting, two of the suspected recruiters discussed the merits of offering to pay for their target’s rent as he applied to become an intern at Rothschild. One called it a “nice gesture,” in a message found by investigators on his phone.
 
“I think he’ll share even more if he sees that we believe in him,” that person later wrote.
 
The student declined the offer in a subsequent message, according to the investigation, but remained in contact with the group — over dinner, at a café and via encrypted messaging apps — as he began his internship in 2017 and later became a full-time M&A analyst at Rothschild.
 
His education — spanning three of France’s top universities — marked a well-worn path into the upper ranks of finance in France and, as investigators allege, a high-value target for those seeking illicit access to market-moving information.
 
Lawyers for two of the suspected recruiters declined to comment, one didn’t reply to a LinkedIn message seeking comment, while no contact details could be found for the last one.
 
By 2019, the then-Rothschild banker was staffed on high-level assignments — including the Dior delisting plan — at the same time that trades in the stock were beginning to raise red flags among regulators.
 
The Arnault family, which already controlled about 97.5% of Dior, had brought Rothschild onboard as it explored buying out the remaining shareholders. The plans were shelved in mid-2019. But investigators believe someone leaked details — and they’re focusing on the HEC graduate.
 
The M&A specialist subsequently worked on Sanofi’s $3.4 billion acquisition in 2020 of Principia Biopharma Inc. from the London office boutique bank Evercore. French authorities allege he may have again been a source for suspicious trades on the biotech’s stock, which the US Justice Department are investigating.
 
The next year the suspected tipster returned to Paris to join another lender, where he still works. That bank declined to comment, while Evercore said that “client confidentiality is of paramount importance” without making any statement on its former staffer.