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Warner boss fined for insider dealing at Universal parent firm
By CMU Editorial | Published on Monday 24 January 2011
Warner Music big boss man Edgar Bronfman Jr has been fined a neat five million euros after being found guilty of insider trading by the French courts in relation to his time as Vice-Chairman of Universal Music parent company Vivendi between 2000 and 2002.
As previously reported, Bronfman Jr became Vice-Chair of and the largest shareholder in Vivendi after the French conglom bought his Seagram entertainment company – aka Universal – in 2000. Vivendi acquired the various Universal companies as part of a massive acquisition spree led by then CEO Jean-Marie Messier. It was a period of rapid growth that backfired, and almost drove the French firm into the ground. After Messier was fired many of Vivendi’s previous acquisitions, including most of the Universal companies (but not Universal Music) had to be sold off.
Messier was accused of misleading his investors as the Vivendi empire began to spin into oblivion, and the criminal case against him reached the French courts last year, despite a Parisian prosecutor recommending the case be dropped, Messier having already been investigated and fined by the French financial regulator.
Bronfman Jr was caught up in the same criminal case because he was accused of using insider information he received as Vice-Chair of Vivendi to sell his shares in the firm at just the right time, ie before oblivion day. Bronfman Jr – now boss of Warner Music, of course – denies any wrongdoing.
But on Friday both he and Messier were found guilty of dodgy dealings. Messier was given a three year suspended sentence and fined 150,000 euros for misleading investors, while Bronfman Jr was given an eighteen month suspended sentence and the very steep five million euros fine for insider trading.
Both men have already confirmed their intent to appeal the rulings. Bronfman Jr told reporters on Friday: “I will appeal today’s decision to the Paris court of appeal and continue to vigorously defend myself against this charge. As I have consistently stated, my trades were proper”.
A spokesman for Warner Music said the firm’s board of directors were disappointed with the decision, but continued to fully support Bronfman.
