MILAN, Italy—On the heels of the mid-July unveiling of its new tire production system, Pirelli S.p.A. is the subject of an insider trading investigation by Italian authorities.
The Italian organization which monitors activity on the country's stock exchange—Commissione Nazionale per le Societa & la Borsa, or the "Consob"—on July 24 sent the Milan prosecutor's office a report on possible insider trading of Pirelli shares prior to the tire maker's December announcement of its upcoming new Modular Integrated Roboticized System.
"There was definitely a peak in terms of volume and share performance in (early) December," said a European analyst who asked not to be identified.
According to the tire industry analyst, Pirelli's stock was trading on average around $1.94 per share in mid-November and at the beginning of December. But two to three days before Pirelli's MIRS announcement, the price went up 10 percent on no major news.
On average, 6 million shares were changing hands each day, but volume peaked at 16 million to 24 million shares each day for two to three days before the announcement.
"Ahead of an announcement, no one was supposed to be aware of it. But it looks like someone was," the analyst said.
Pirelli S.p.A. did not comment, but did issue a written statement saying it did not believe any company executives were targets of the investigation, according to Bloomberg reports. However, on July 26 Pirelli filed its own complaint with the Milan prosecutor's office about the stock market regulator's report and the legality of making the report public.
According to Bloomberg reports translating the Italian release, Pirelli said it decided to file the complaint after taking into account the effects the report has had on the company's image and management.
Pirelli's shares closed on Aug. 18 at $2.60.