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The
French regulator, Autorité des Marches Financiers (AMF") fined LVMH €8
Million ($10.4 million) which is less than the maximum penalty of €10
Million ($13 million) which the company was facing. The fine was due to LVMH's failure to disclose a large accumulation of Hermès stock under French securities laws.
This is the largest fine ever imposed by the AMF,
which noted in a press release that such fine reflects the "seriousness of the successive
breaches of public-disclosure requirements which
consisted in concealing each stage of LVMH's stake-building in Hermès"
and that "circumvention of the rules intended to ensure transparency,
which is so vital to
orderly markets, must be punished to the same extent as the disruption
it
causes."
The AMF spent two years investigating how LVMH was able to
secretly amassed such a large stake before imposing the fine. Nonetheless, LVMH will not be
obligated to give up the stock it accumulated by circumventing securities laws which makes the fine of €8 million like
a slap on the wrist compared to the paper gains of €2 billion ($2.6 billion) that LVMH has already accrued from the purchase
of Hermès stock. It seems to me that the AMF hasn't done anything to
intimidate future companies from doing the same given the amount of the fine and potential upside in rewards.
LVMH said it would appeal the decision immediately. Hermès has not yet commented on the fine as of this writing.
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