View from City Road: Manipulation or what in the Eurotunnel?

Was the Eurotunnel refinancing rigged by self-interested City financiers and bankers to the detriment of the company's long-suffering shareholders? The allegation is already being investigated by the Commission des Operations de Bourse (COB) in Paris.

Now the London Stock Exchange, too, is being drawn into the inquiry, which promises to become one of the biggest into alleged market manipulation in a long time.

Eurotunnel itself believes its shares were substantially 'shorted' by big professional investors on at least three occasions in the run-up to its pounds 850m rights issue - once at the time of its annual report, then when it released its revised revenue forecasts, and a third time immediately before the rights issue was launched.

Market manipulation is against the law and should not be treated lightly. Nonetheless, there appears to be a great deal of huff, puff and the sound of old scores being settled in all this.

As has already been well-recorded, Eurotunnel and its advisers fell out badly during the course of this hugely difficult refinancing exercise. If you think what they said in public about each other was bad, you should hear what they are saying in private and to the regulators.

Swiss Bank Corporation's attempt first to muscle in on the action, then to claim credit for the refinancing, didn't just ruffle feathers, it caused explosions.

In the end, the Stock Exchange may discover nothing more untoward than that - a row about City fees and vested interest. The precipitous fall in the Eurotunnel share price would have happened anyway, for it occurred against a background of relentless bad news about the tunnel.

Add to that the way Eurotunnel misled the market about the size of the rights issue - though apparently not intentionally, as it was not clear until the last week quite how large it would have to be - and you begin to wonder who was manipulating whom.