Societe Generale is to sue Associated Newspapers over an erroneous Mail on Sunday story claiming that the French bank was on the verge of collapse.
The piece, published on 7 August, quoted unnamed sources saying that the sovereign debt crisis had driven the company to "the brink of disaster" and sparked a run on its shares.
With the markets on a hair trigger that week as rumours swirled about the exposure of Europe's systemic banks to Greek debt, the report sparked a selloff, with SocGen shares diving as investors dumped the stock.
The bank's CEO, Frederic Oudea, was forced to go on television to deny the rumours, but the bank lost 33% of its value that month. Disaggregating how much of the fall was due to the article and how much was due to persistent concerns over the stability of the eurozone and the French economy will be difficult, but at the time, the article was circulated amongst traders and market reporters.
The Mail on Sunday retracted the article two days later and issued an apology, admitting that the story was "not true".
However, the bank has decided that the apology and retraction were not prominent enough - they were only published online and not in the newspaper's print edition. SocGen's lawyers, Herbert Smith, have filed papers at the high court claiming that the erroneous story had caused "substantial damage to [SocGen's] reputation".
A Mail on Sunday spokesman said: “The Mail on Sunday has already apologised for publishing that article. Any claims for damages will be resisted.”
SocGen did not return requests for comment.
The case caused considerable introspection in the French media, after reports began to claim that the source of the Mail's story was a fictional series being run in the Le Monde newspaper, "The End of the Line for the Euro". That series speculated about how the eurozone debt crisis might evolve.
The source of those reports appeared to be a jovial tweet by Reuters journalist, Natalie Huet, but Le Monde's editorial director, Erik Izraelewicz, wrote a front-page editorial defending the series, noting the irony of how a fictional story about the role of market rumours in destabilising European politics had in itself become the subject of rumours.
The suit is the second blow in a week for Associated Newspapers, which on Monday was accused of being involved in the phone hacking practices that eventually brought down the News of the World.
In a testimony before the government enquiry into the scandal, the actor Hugh Grant said that the only possible source of a story that appeared in the Mail on Sunday could have been his mobile phone's voicemail.