Gerard Rameix, chairman of the Autorite des Marches Financiers (AMF), the regulator of the French stock market, said Wednesday that its Sanctions Committee will decide what penalties, if any, will be put on LVMH which Hermès has accused of insider trading and share-price manipulation in order to accumulation its 22.3% stake in Hermès.
LVMH’s unwanted stock accumulation forced Hermès’ majority shareholders, descendants of its founding families, to launch a poison pill strategy to stop LVMH.
The AMF has been investigating the LVMH’s stake ever since the world’s largest luxurygoods company announced in October 2010 that it had amassed as much as 17% of Hermès, some $1.87 billion.
LVMH maintains it accumulated the stake using derivative instruments called equity swaps purchased from banks over a couple of years. Moreover, LVMH has described its Hermès stake as a “friendly” investment and didn’t seek a seat on Hermes’ board of directors.
Hermès’ majority shareholders think otherwise, however, viewing LVMH’s stake as hostile and continue to fight on about it in civil court action. LVMH has countersued Hermès.
In October, AMF informed LVMH that it identified a number of possible alleged irregularities regarding its purchase of Hermès shares. But Rameix has been quoted, saying he didn’t believe LVMH engaged in insider trading in this instance.
Whatever, the outcome will be decided by the Sanctions Committee, which operates independent of the AMF Board. The AMF may appeal decisions of the Sanctions Committee.