The LVMH group is in the hot seat pending the outcome of the 2 year ago investigation by the due to a the company close to 20% stock acquisition of Hermes Brand. The LVMH multinational group was founded in Paris back in 1987 following the merger of fashion house Louis Vuitton with Moet Hennessy. LVMH is home to some of the top luxury brands with a portfolio that holds over 60 top brands in wine & spirits, fashion & leather, perfumes & cosmetics, watches & jewelry and selective retail. Some of the top leading luxury brands includes brands like Christian Dior, Hennessy, Moet & Chandon and Louis Vuitton. The oldest brand on the LVMH portfolio include wine producer that dates back to 1593 called Chateau d’Yquem.
According to reports LVMH is under the investigation by the Financial market Authority (AMF) for secretly acquired over 20% of the Hermes brand back In 2010. Although the Hermes stock has been traded since the heirs of the Thierry Hermes own 1993 most of its shares. The AMF accused the LVMH group of using financial derivatives and secret orchestrations to obtain the stocks, which led to the current sanction processing.
A public hearing will kick off Friday, May 31 in which the objection against LVMH group will be present to the AMF. LVMH is along with other witness will take the stand on their own defense. The LVMH will have to explain how they acquire the Hermes stocks and deriviates since 2001 via banks and foreign subsidiaries while failing to comply with regulations and listing it in its financial statements.
If sanction applies LVMH will face a possible fine, which under the AMF new rules the max fine is 100 million Euros.
The chairmen of LVMH group, Bernard Arnault issued a statement to the press saying, “ We did not expect to be shareholders of Hermes, We make financial investment and it played out in a way we had not expected”.
Back in March 2013 Hermes has since filed its own courts case against LVMH group.
French market regulators AMF rejected LVMH’s claims there were flaws in the procedure on May 29, 2013. They requested to hit LVMH with the maxium fine of 10 million Euros.