PARIS — The Paris Court of Appeals on Wednesday upheld a fine imposed on Pierre Berge by France’s stock market watchdog, but it reduced the amount of the original penalty by two-thirds.
In this civil suit, Judge Myriam Ezratty ruled that Berge must pay a fine of $173,000 (1 million francs) at current exchange rates, one-third of the sum set initially by the Commission des Operations des Bourses, the French equivalent of the Securities and Exchange Commission.
The case stems from the sale of 120,000 shares in Yves Saint Laurent Groupe owned by Berge and the designer to several Swiss banks in September 1992. The sale was made just ahead of an announcement of poor first-half results, which caused YSL stock to plunge on the Paris Bourse.
The judge accepted that Berge had to sell some YSL stock because his personal indebtedness exceeded $15.9 million (92 million francs) on June 30, 1992. But, in her ruling, she said Berge had exploited “privileged information concerning the collapse in the results of the group.”
Berge, who could not be reached for comment, has consistently denied this very point. The judge concluded that she had decided to reduce the fine because of “the plaintiff’s need to sell stock and the pressure of the bank to reduce its debt position.”
Guy Danet, Berge’s lawyer, said: “My client is very happy to save 2 million francs, though we have recommended he appeal the decision to the Court of Cassation.” The Court of Cassation is France’s highest court.
Danet stressed that Ezratty had not ruled that Berge was guilty of insider trading.
“All the judge said was that Mr. Berge should not have sold the stock because he knew of the bad financial results. The COB’s position is that once an executive knows of a significant change in a company’s performance that person can’t sell any stock in the company. We believe that is absurdly restrictive and stops any manager from buying and selling his own company’s shares,” said Danet.
A related criminal investigation by a Paris magistrate into whether Berge or Saint Laurent were guilty of insider trading continues. Even if the magistrate decides to prosecute the pair, this case will probably not come to court before next year.