January 18, 2008 -- The prosecution of Bielefeld joined the investigation against German machine tool maker Gildemeister AG, on suspicion of insider trading, following the huge trading volume of Gildemeister shares on the stock exchange on January 17, 2008, senior prosecutor Klaus Pollmann said in a media report on January 18.

After the share price plunged on January 16, the machine tool maker's stock went up by 12 pct the following day, and thus became the leader in the mid-cap index MDax on the Frankfurt Stock Exchange (FSE). Local financial watchdog BaFin will inspect the development of the share price and compare it to the information given by the company.

A total of 4.4 million Gildemeister shares, or more than 10 pct of the company's 43.3 million shares, were sold on January 16, a figure nine times higher than the average of the previous twelve months. The news that the prosecution has raided the offices and the home of Gildemeister CEO Ruediger Kapitza, suspect in breach of trust, bribery and tax evasion, triggered a wave of sales of the company's stock. The share price fell by 25 pct and local banks Bankhaus Lampe and BHF Bank lowered their ratings on the company's stock significantly.

Work council head and member of the supervisory board Wulf Bantelmann said he suspected a conspiracy against the company. An attack by a hedge fund or a rival is not out of the question, BaFin said. Analyst Gordon Schoenell believes it is possible that institutional investors had decided to enter the marker by purchasing Gildemeister shares. Other analysts even suspect that the interests are bundled. A participation by more than 3.0 pct has to be reported.

It is still not known when Kapitza's hearing will take place. In case of bribery, there will be investigations against further employees at Gildemeister.

Source: German News Digest