The French exchange watchdog has fined LVMH for 8 million euro, because the French luxury company has “deviously” bought a stake in the capital of competitor Hermès. LVMH has already said it will appeal the decision.
Biggest fine ever of its kind
The Autorité des Marchés Financiers (AMF) has issue with the way LVMH acquired a part of Hermès. The French exchange watchdog even demanded a fine of ten million euro, but even the fine of eight million euro is still the biggest one ever for this kind of exchange disputes.
The authorised AMF commission especially condemns “the bypassing of all possible rules that are in place to guarantee the transparency that is necessary for the smooth operation of the exchange”. It also said there were “serious consecutive shortcomings that existed to mask all stages through which LVMH acquired part of Hermès”.
Through a complex system of equity swaps LVMH succeeded in getting 17 percent of shares of Hermès in the fall of 2010, without notifying exchange authorities. When the manoeuvre was found out, LVMH was already 22.6 percent owner of Hermès.
Immediately after the verdict of the French watchdog, LVMH announced it would appeal the sanction. “The principle of the sanction, and the amount, is completely unjustified”, they said at headquarters in Paris. LVMH firmly denies not fulfilling its duty to inform and it is determined to show “the real course of events” to the Court of Appeal in Paris.
The company also states that the fine does not question the validity of the operation, meaning LVMH will remain owner of its shares in Hermès. For now, because to have those transactions undone, Hermès has already filed a complaint last year. That “affaire” is currently ready for review at the Trade Court: the last word has not yet been said about this…