Louis Vuitton Will Not Appeal Fine Over Hermès Stake

Louis Vuitton has decided not to appeal the fine imposed from the AMF (France's equivalent of the Securities Exchange Commission in the U.S.).  The AMF fined LVMH a record €8 million a couple of months ago for failing to disclose a significant amount of Hermès' stock it accumulated by using complex derivatives to avoid detection in the public markets.  While the company initially stated it would appeal the decision, it has now changed coursed and decided to pay the fine and move on. 

LVMH said in a statement, that the decision was to avoid further costs and time dealing with an appeal and to "[ensure] the soundest possible management of its investment in Hermes."  The company also reiterated that it "never breached regulations regarding ownership thresholds or engaged in insider trading or market manipulation."Read the entire statement after the jump.

LVMH Takes Control of Loro Piana for $2.6 Billion

LVMH Moët Hennessy Louis Vuitton purchased an 80 percent stake in Loro Piana, costing LVMH €2 billion ($2.56 billion) and valuing the company at €2.7 billion ($3.48 billion).  Loro Piana, the Italian luxury clothing company best known for its luxury cashmere and wool goods where a cashmere cardigan will set one back $1,250 and cashmere lined rain coat, almost $11,000, has weathered the recession well and is expected to have sales of over €700 million this year.   LVMH CFO, Jean-Jacques Guiony said during a conference call, "We have a big respect for the brand and have been looking at [Loro Piana] for many, many years." 

French Regulator Fines Louis Vuitton $10 Million Over Hermès Stake

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."  

Louis Vuitton Files Criminal Lawsuit Against Hermès

Photo: Judy Wu

The tension between LVMH and Hermès is here to stay.  Just a few weeks before the French market regulator is expected to decide LVMH's fate for secretly amassing a large stake in Hermès, LVMH decides to file a criminal complaint against an Hermès manager for slander.  The manager's identity has not been disclosed but LVMH is claiming that the manager made implications that LVMH acted fraudulently.  The media has speculated that the lawsuit is against Hermès International's CEO, Patrick Thomas.  

French Regulator to Decide Hermès - LVMH Dispute

On October 23, 2010, LVMH Moët Hennessy Louis Vuitton SA announced that they had acquired a significant stake in Hermès International, which is now at 22.3% to everyone's surprise including Hermès themselves.  We now know since 2001, LVMH has slowly been acquiring shares of Hermès below the 5% threshold in which an amount over would require disclosure under French securities laws.  The company also used complex derivatives and other financial instruments to amass its stake without tipping off the public, which may have been in violation of those securities laws.