Louis Vuitton group hit with €8 million fine

The luxury group LVMH, which includes Louis Vuitton was hit with an €8million fine on Monday failing to tell financial markets that it was increasing its stake in luxury bag maker Hermes.

Louis Vuitton group hit with €8 million fine
Photo: George Groutas

France's financial market regulator said on Monday it had fined luxury conglomerate LVMH a record €8 million euros for failing to inform markets it was raising its stake in elite handbag and scarf maker Hermes.

"Taking into consideration the 'seriousness of the successive breaches of public disclosure requirements, which consisted in concealing each stage of LVMH's stakebuilding in Hermes', the Committee imposed an 8-million euro fine on LVMH," said a statement from the AMF regulator citing the decision.

LVMH immediately said it planned to appeal, calling the decision and size of the fine levied "totally unjustified".

The two companies have been locked in a bitter feud ever since LVMH, which owns Louis Vuitton and dozens of other luxury brands, revealed in late 2010 that it had secretly built up a 17-percent stake in the family-dominated Hermes.

LVMH, led by tycoon Bernard Arnault, later built this holding up to 22.6 percent prompting Hermes to cry foul and accuse Arnault of surreptitiously trying to add Hermes to his large stable of brands.

The AMF took issue with the way LVMH used swap agreements with three banks for amounts just below mandatory disclosure rules.

While it acknowledged that in isolation, none of the deals infringed disclosure rules, the AMF found there was no commercial justification for how they were structured and, taken together, constituted a breach.

It said LVMH should have informed markets in 2008 and 2009 about the deals in its consolidated accounts as it had a responsibility to report preparations for transactions that would have an impact on share prices.

Moreover, LVMH should have disclosed the deals when it agreed in June 2010 to settle the swaps and acquire the shares in Hermes.

The decision by the AMF's enforcement committee said the "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 fine is a record for AMF, but less than the €10 million sought by its investigators.

"This decision is in line with Hermes' position," said a member of the Hermes entourage.

Last month, Hermes began a legal battle to get the swap deals reversed, accusing LVMH and the three banks – Societe Generale, Natixis and Credit Agricole – saying the transactions amounted to fraud.

If the fine is upheld it will have little impact on LVMH's finances, as the company posted a net profit of €3.4 billion last year on sales of €28.1 billion.

"Nevertheless it will stain the group's image a little bit," said Serge Carreira, a luxury sector specialist at Sciences Po university in Paris, although it is primarily a French story and not an "international event".

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Paris show of masterpieces unseen in West proves a smash hit

A smash-hit Paris show of one the world's greatest private collections of modern art is to be extended after 600,000 people flocked to see it in just 10 weeks.

Paris show of masterpieces unseen in West proves a smash hit
Photo: AFP

“Icons of Modern Art” at the Louis Vuitton Foundation features the cream of the staggering collection of 250 paintings put together by Sergei Shchukin before the Bolshevik Revolution, which had never before been seen outside Russia.

The show includes 29 works by Picasso, 22 by Matisse, 12 by Gauguin and other top-notch Cezannes and Van Goghs that the super-rich textile merchant picked up on trips to Paris before World War I.

With 60,000 people a week flocking to the spectacular though relatively modest-sized private gallery designed by Frank Gehry, its hours are being extended to try to cope with the demand, with doors opening seven days a week until 11:00 pm (2200 GMT) in February.

In the final week of the extended run, which ends on March 5, the foundation in the west of the French capital will stay open till 1:00 am.

The gallery — paid for by the French luxury goods tycoon Bernard Arnault — will lay on a breakfast every morning for visitors in the final week when doors open at 7:00 am, it told AFP.

Magritte blockbuster

That could end up amounting to quite a mountain of croissants as the show's attendance is already outstripping the blockbuster “Magritte” exhibit at the Pompidou Centre in Paris, which is currently pulling in 6,000 people a day.

As well as the impressionist and post-impressionist masterpieces, the exhibition also includes 30 major pieces from the Russian avant-garde suprematist and constructivist movements, loaned by the Tretyakov State Gallery in Moscow and the Russian Museum in St Petersburg.

Shchukin, who fled Russia for France after the revolution, had a particularly close relationship with Henri Matisse, whom he brought to Moscow in 1911 to decorate his palatial home.

He also commissioned two of the artist's most important works, “The Dance” and “Music”, which are the centrepieces of the Paris show, curated by the former head of the city's Picasso Museum, Anne Baldassari.

Lenin himself signed the decree to expropriate the works, before Stalin scattered the collection to museums in Moscow and St Petersburg, condemning some of the greatest masterpieces of 20th-century art as “bourgeois and cosmopolitan”.

The exhibition is the fruit of years of negotiations between LVMH boss Arnault and the Russian authorities, with a partnership agreement signed last year between the foundation and the Hermitage Museum in St Petersburg and Moscow's Pushkin Museum.