France’s stock market regulator was scheduled to hold a hearing May 31 on allegations that luxury-goods conglomerate LVMH used insider-trading tactics to stealthily acquire a major stake in Hermès over nearly a decade,
the
Wall Street Journal
reported.
Due to the fragmentation of the stake, LVMH was able to avoid for a time the legal obligation to reveal it, which becomes necessary when an investor owns at least 5% of a company, according to French market rules.
LVMH denies any wrongdoing, the article said. The French authorities are expected to issue a ruling within a few weeks, according to the report.
The French regulators’ investigation found that LVMH acquired its stake in Hermès via directly purchasing shares through companies in Luxembourg and Delaware and then through equity swaps, the
Journal
article said.
Hermès unsuccessfully tried to negotiate with LVMH, asking the giant firm to relinquish the 12% of its stake that was acquired through equity swaps, according to the report.
French prosecutors are also conducting a criminal investigation of the matter, the article said. (Source:
Wall Street Journal,
May 31, 2013.)
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