Nicola Bulgari, the former head of luxury jeweler Bulgari, and his company Tara have been found guilty of insider trading in LVMH shares. The Paris court has fined Nicola Bulgari 1.2 million euros and his company Tara 5.5 million euros for their involvement in stock market transactions related to the luxury giant in 2016. The sentence, which was reached through a negotiated agreement with the National Financial Prosecutor’s Office, includes a nine-month suspended prison sentence for Nicola Bulgari. The court’s decision emphasizes France’s strict stance on insider trading offenses.
Nicola Bulgari, currently 82 years old, has confessed to engaging in trading activities based on privileged information he received on July 5, 2016, regarding the growth of LVMH. He personally bought 20,000 LVMH shares between July 12 and 18, 2016, while Tara, his finance and real estate company, purchased 82,600 shares between July 6 and 15 in eight separate transactions. These shares were all sold on July 27, 2016, just before LVMH announced positive growth results, leading to an increase in the share price. Nicola Bulgari and his company profited significantly from these transactions.
LVMH, the world’s leading luxury goods company, owns over 75 prestigious brands, including Bulgari. The Bulgari brothers had sold their company to LVMH in 2011 and were no longer part of the board of directors at the time of the insider trading events.
The suspicious stock market operations caught the attention of the financial markets authority, which initiated an administrative investigation in January 2017. The National Financial Prosecutor’s Office subsequently commenced a preliminary investigation in September 2019, given the severity of the situation. The prosecutor, Laurent Couderc, highlighted strong indications pointing towards insider trading. Eventually, in December 2021, Nicola Bulgari, who had contested the allegations initially, admitted to the facts during the investigation.
Although the source of the privileged information remains undisclosed, several compelling pieces of evidence supported the insider trading accusations against Nicola Bulgari. These included the timing and nature of the transactions, the lack of plausible explanations provided by Bulgari, and a possible channel for the transmission of information. The financial prosecutor concluded that Nicola Bulgari’s actions could only be explained by access to inside information.
The judgment in this case emphasizes France’s commitment to combatting insider trading. Currently, there are thirty-six ongoing legal proceedings related to stock market violations, including insider trading, dissemination of false or misleading information, and price manipulation. These cases account for around 6% of the total number of cases handled by the financial division.
(useful links:
1. https://www.investopedia.com/terms/i/insidertrading.asp
2. https://www.finra.org/investors/learn-to-invest/advanced-investing/understanding-insider-trading)
