French regulator plays down Hermes case against LVMH
By Pascale Denis
PARIS, Oct 2 (Reuters) - French stock market regulator AMF said it did not believe luxury group LVMH had engaged in insider trading or share price manipulation when it bought its first 14 percent stake in rival Hermes in 2010.
Hermes, which has been fighting LVMH's gradual stake building, last month asked for a criminal investigation into LVMH's transactions, following an earlier civil complaint to the AMF watchdog.
LVMH acquired its 14 percent stake, which it quickly raised to 17.1 percent, through equity derivatives, which allowed the luxury group not to declare its holding. It now owns 22.6 percent of the French leather goods specialist.
It is normal practice for prosecutors to ask the AMF for advice before launching a formal investigation.
"The question asked (of the AMF) is to know whether there was insider trading and share price manipulation," AMF Chairman Gerard Rameix told BFM radio.
Asked if the answer to the question was "no", Rameix said: "Yes, one can say that," adding that the AMF would soon give its formal opinion to prosecutors.
Hermes declined to comment on Tuesday.
Referring to a different ongoing procedure, Rameix told BFM that the AMF had transferred the LVMH/Hermes file to its sanctions committee to decide whether LVMH should be sanctioned for its actions.
"We have passed on complaints," Rameix said, adding that the committee would examine the file in the first months of 2013.
LVMH has denied any wrongdoing. A LVMH spokesman said the move was normal procedure and did not mean the luxury group would be sanctioned.
The legal loophole which allowed a party to build up a stake in a listed company unnoticed through derivatives has just been closed, following amendments to French law.
(Writing by Astrid Wendlandt; Editing by Helen Massy-Beresford)
Keywords: HERMES LVMH/