Noël Forgeard, once the most powerful man in Europe's aerospace industry, suffered a stinging humiliation yesterday as he was detained by police in connection with the insider trading allegations that have rocked EADS, the aerospace and defence giant.

Mr Forgeard was summoned for questioning by the Paris police's financial division, where he was told that he would be placed in custody over claims that he used privileged information to earn millions of euros from his stock options in 2006.

The move increased fears that EADS's current executives could receive similar treatment.

Mr Forgeard, 61, could be put under formal investigation on suspicion of insider dealing by a magistrate at the end of his detention, which can last up to 48 hours. The offence carries a maximum fine of €1.5 million (£1.2 million) or ten times the profits made from the operation.

Mr Forgeard, formerly the joint chief executive of EADS, was questioned after a report by the French Financial Markets Authority pointed to “massive” insider dealing by 17 executives at EADS and Airbus.

They are accused of selling stock in 2005 and 2006 before production delays to Airbus's flagship A380 became public knowledge, wiping 26 per cent off EADS's share price and €5.5 billion off its market value. Mr Forgeard is alleged to have known about the looming crisis when he sold 360,000 shares in November 2005 and March 2006 for a total of €4.3 million.

According to official documents, he exercised an option to buy the shares at a price between €15 and €17 and sold them at €32.01. Mr Forgeard was forced to stand down in July 2006 with an €8.5 million pay-off.

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