FRANKFURT, Germany (AP) — Police raided the offices of Air Berlin PLC as part of an investigation into insider trading by management board members, including the chairman and chief executive, before the acquisition of a rival company last year, the carrier said yesterday.The airline, Europe's third-biggest discount carrier, has dismissed those allegations, saying the shares were purchased legally well before the board approved any plan to acquire dba, as police raided homes of two board members as well as company offices in Berlin, Stuttgart, Munich, Duesseldorf and Langenfeld.

Shares of Air Berlin fell more than 6.2 percent at one point but by late trading had recovered to 15.95 euros ($21.38), or down 3.8 percent.

The Stuttgart prosecutor's office said in a statement that a Berlin-based airline and six of its employees were being investigated, but did not identify the employees or the company.

Air Berlin said the investigation centred on claims that 1.5 million euros ($2 million) worth of its shares were purchased just ahead of its announcement on August 17, 2006, that it was acquiring Munich-based dba.

Air Berlin spokesman Peter Hauptvogel said that five members of the company's management board, including Chief Executive Joachim Hunold, were among those being investigated. The others included supervisory board chairman Johannes Zurnieden and three department chiefs, spokeswoman Claudia Loeffler said.

Hauptvogel said the company is co-operating with investigators, and Hunold called the charges "unfounded," adding that at no time did he or his colleagues do anything improper.

Zurnieden was unavailable for comment.

"Whether and to what extent Air Berlin's share price would increase following the publication of the dba acquisition was more than unknown," Hunold said.

"At the beginning of June 2006, I purchased shares simply because at this point the lockup period imposed by the stock market regulations came to an end and I wanted to send a positive signal to the market," he said. He added that he has not sold those shares.

A lockup period is the interval when an investment may not be sold. The Federal Financial Supervisory Authority, or BaFin, Germany's financial regulator, declined to comment, citing the ongoing investigation.

Air Berlin flies to destinations across Europe and North Africa. The carrier, founded in 1978, made its stock market debut in May 2006.