Hermès Suit Against LVMH Undergoes Preliminary Inquiry

Last month, we covered the legal dispute that arose between two of the largest French luxury power-houses out there after Hermès accused LVMH of insider trading, collusion and manipulating stock prices. Hermès filed the complaint after LVMH surprised markets in 2010 by revealing that it had acquired a 17.1 percent stake in Hermès via cash-settled equity swaps that allowed it to circumvent the usual market rules requiring firms to declare share purchases.

We also reported on LVMH's countersuit against Hermès for slander, blackmail and unfair competition. This week, online reports have indicated that the Paris prosecutor’s office has opened a preliminary inquiry into the complaint to determine whether the prosecutor will dismiss the case or hand it over to an investigating judge. The French stock-market regulator AMF will also continue to investigate the matter separately from the prosecutor's office to determine if LVMH respected market rules. The results of the AMF investigation will be revealed early next year. As to whether the case gets dismissed by the Paris prosecutor's office remains to be seen. Either way, TFG will be sure to keep you posted.