Did LVMH violate securities regulations?

Author: | Published: 21 Dec 2010

On October 27 2010, LVMH revealed that it had accumulated a 17.1% stake in Hermès International by using equity swap contracts for 12.8 million Hermès shares. In its regulatory filing, LVMH stated that it had no plans to bid for all of Hermès' shares, that it was not seeking control or board representation, but that it "considered pursuing, where appropriate, its acquisitions of Hermès International shares according to market conditions".

LVMH's surprise announcement after crossing various statutory disclosure thresholds raised questions about whether it violated French securities regulations or instead exploited loopholes in these regulations to avoid disclosure. On November 5 2010, the French securities regulator, the AMF (Autorité des Marchés Financiers), announced that it had begun investigating the conditions under which the Hermès shares were acquired.

Defining control It should first be noted that LVMH...