Nicola Bulgari and his company Tara convicted of insider trading in LVMH shares

Nicola Bulgari, former head of LVMH-owned jeweller Bulgari, was fined 1.2 million euros and his company Tara 5.5 million euros in Paris on Tuesday for stock market transactions linked to the French luxury giant in 2016.

The sentence, which was negotiated with the National Financial Prosecutor's Office under a procedure of prior acknowledgement of guilt, includes a nine-month suspended prison sentence for Nicola Bulgari, who was found guilty of insider trading.

Both sentences against Nicola Bulgari and his company Tara were approved by a judge of the Paris judicial court. The 82-year-old Nicola Bulgari admitted buying and selling LVMH shares based on information obtained on July 5, 2016 about the growth of the luxury giant.

Between July 12 and 18, 2016, Nicola Bulgari personally acquired, in three transactions, 20,000 LVMH shares through two financial operators, JP Morgan and Banca nazionale del lavoro (BNL). The asset management company Tara, which specialises in finance and real estate, bought 82,600 shares between July 6 and 15 in eight transactions via two financial operators.

All the shares were sold on July 27, 2016. The day after, LVMH had announced a volume growth of 3% and an organic growth of 4%, leading to a rise in the share price.

The former jeweller was able to realise a capital gain of 292,400 euros and his company 1.4 million euros.

LVMH, the world's leading luxury goods company, has more than 75 brands, including Bulgari, which it acquired in 2011 from the brothers Paolo and Nicola Bulgari. At the time of the events, the two brothers were no longer on the board of directors.

A cluster of serious indications

The financial markets authority had spotted these stock market operations and launched an administrative investigation in January 2017. Then the PNF opened a preliminary investigation in September 2019, considering that "the facts were of a certain gravity", explained the financial prosecutor Laurent Couderc.

Heard in December 2021 in the context of this investigation, Nicola Bulgari "long disputed the facts", the president recalled, asking him to explain this change of position. "I consulted my lawyers and I concluded that I had to admit the facts," he replied in Italian, assisted by an interpreter. "I am 82 years old, I have very little memory" and "I don't remember who suggested I do this", he replied with annoyance to the chairwoman's insistent questions about how he had obtained the information about the announcement of a rise in LVMH sales.

"I recognise what I did, I feel guilty," he finally said, seeming to want to put an end to the questions and ensure that the sentence would be approved. He thus avoided a hearing before the criminal court.

The investigations did not make it possible to identify who had informed Nicola Bulgari of LVMH's positive results, but "a cluster of serious and concordant evidence" based on four elements made it possible to substantiate the accusations of insider trading, the financial prosecutor explained.

These are "the timely" and "atypical" nature of the transactions carried out by Nicola Bulgari in a very short period of time, "the absence of convincing explanations" from the latter and "a plausible circuit for the transmission of information", Mr Couderc listed.

The operations carried out by the former jeweller "could only result from privileged information", the financial prosecutor considered.

Thirty-six proceedings on stock market violations - insider trading, dissemination of false or misleading information, price manipulation - are open at the financial division, in preliminary investigation or judicial information, that is to say approximately 6% of the volume of cases.