LVMH fined for failure to reveal deal
Source: AFP |
July 3, 2013, Wednesday
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Print Edition
Print Edition
FRANCE'S financial market regulator said on Monday it had fined luxury firm LVMH a record 8 million euros (US$10.4 million) for failing to inform markets it was raising its stake in elite handbag and scarf maker Hermes.
"Taking into consideration the 'seriousness of the successive breaches of public disclosure requirements, which consisted in concealing each stage of LVMH's stakebuilding in Hermes', the committee imposed an 8-million euro fine on LVMH," said a statement from the AMF regulator.
LVMH immediately said it planned to appeal, calling the decision and size of the fine levied "totally unjustified."
The two companies have been locked in a bitter feud ever since LVMH, which owns Louis Vuitton and dozens of other luxury brands, revealed in late 2010 that it had secretly built up a 17-percent stake in the family-dominated Hermes.
LVMH, led by tycoon Bernard Arnault, later built this holding up to 22.6 percent prompting Hermes to cry foul and accuse Arnault of surreptitiously trying to add Hermes to his large stable of brands.
The AMF took issue with the way LVMH used swap agreements with three banks for amounts just below mandatory disclosure rules.
While it said that in isolation, none of the deals broke disclosure rules, the AMF found there was no commercial justification for how they were structured and, taken together, was a breach.
It said LVMH should have informed markets in 2008 and 2009 about the deals in its consolidated accounts as it had a responsibility to report preparations for transactions that would have an impact on share prices.
"Taking into consideration the 'seriousness of the successive breaches of public disclosure requirements, which consisted in concealing each stage of LVMH's stakebuilding in Hermes', the committee imposed an 8-million euro fine on LVMH," said a statement from the AMF regulator.
LVMH immediately said it planned to appeal, calling the decision and size of the fine levied "totally unjustified."
The two companies have been locked in a bitter feud ever since LVMH, which owns Louis Vuitton and dozens of other luxury brands, revealed in late 2010 that it had secretly built up a 17-percent stake in the family-dominated Hermes.
LVMH, led by tycoon Bernard Arnault, later built this holding up to 22.6 percent prompting Hermes to cry foul and accuse Arnault of surreptitiously trying to add Hermes to his large stable of brands.
The AMF took issue with the way LVMH used swap agreements with three banks for amounts just below mandatory disclosure rules.
While it said that in isolation, none of the deals broke disclosure rules, the AMF found there was no commercial justification for how they were structured and, taken together, was a breach.
It said LVMH should have informed markets in 2008 and 2009 about the deals in its consolidated accounts as it had a responsibility to report preparations for transactions that would have an impact on share prices.
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