A French court fined Warner Music Group chairman and CEO Edgar Bronfman Jr. €5 million ($6.7 million) Friday for insider trading while serving as a senior executive at Gallic conglom Vivendi Universal.
Bronfman, who was Viv U vice chairman from 2000 to 2003, has also received a 15-month suspended prison sentence.
The charges relate to 2002, when Viv U management fought to shore up the conglom’s stock price after the Internet bubble burst. Bronfman informed WMG on Friday that he intended to appeal the decision. The fine is suspended, pending the appeal.
The court also convicted former Viv U CEO Jean-Marie Messier, an icon in France of rampant 1990s capitalism, of misappropriation of company funds and misleading reporting while at the head of Viv U, then Europe’s biggest media group.
Messier received a $200,000 fine and a three-year suspended sentence. His lawyer, Pascal Wilhelm, said Messier will appeal.
Messier plunged Vivendi into a buying spree in the late 1990s, energized by the conglom’s seemingly ever-soaring stock price.
Vivendi paid $42 billion in 1999 to buy Seagram, which included Universal Studios, MCA Records and USA Networks, bringing Seagram’s Bronfman into the company. Messier was ousted in August 2002, and the company was forced to divest itself of Universal to alleviate its huge debt load.
The trial caps nine years of investigations dating to 2002.
The convictions come despite a high-profile trial in June, when the public prosecutor, arguing that criminal intent must be proved, recommended the executives’ acquittal.
Messier’s conviction on misappropriation of company funds relates to a $26.8 million severance package that he later renounced.
His sentence could have been more severe: Messier faced a maximum five-year jail sentence, and was cleared Friday on another count of manipulating Vivendi’s stock price.
Further litigation is still to come.
Vivendi, Messier and former Vivendi finance director Guillaume Hannezo stood trial in January in a Manhattan district court in a class-action lawsuit involving a million U.S., French, British and Dutch Vivendi investors. The jury cleared the execs, but found Vivendi liable of misleading investors from 2000 to 2002 with statements that hid a liquidity crisis. Damages have yet to be determined.