On 24 March 2022, the Paris Court of Appeal handed down a judgment (N° RG 20/08390) confirming most provisions of the French Market Authority (AMF)’s unprecedented sanction decision against Elliott, which was sentenced on appeal to a fine of €14 million for violating applicable disclosure rules (in addition to a €4.5 million fine for obstructing the AMF’s investigations).
In 2015, Elliott acquired shares and derivatives relating to financial instruments issued by French listed company Norbert Dentressangle (NDSA), which at the time was targeted by a takeover bid from US company XPO Logistics Inc. These acquisitions gave rise to several declarations of thresholds crossings and intention to the AMF. Elliott notably declared the crossing of the 5% capital and voting rights threshold of NDSA as a result of its acquisition of ‘contracts for difference’ on NDSA shares and that it wasn’t sure yet whether it would participate in XPO’s offer. Two weeks later, Elliott made a new declaration stating that it (i) intended to pursue its acquisitions of NDSA shares and related derivative instruments and (ii) didn’t intend to contribute to XPO’s offer. XPO eventually acquired 86.25% of NDSA’s capital and Elliott a bit more than 9%. This allowed Elliott to block the squeeze-out of NDSA’s minority shareholders by XPO, as French law provided at the time for a squeeze-out threshold of 95% (lowered to 90% since then).
The AMF decided to impose on Elliott a fine of €20 million for declaring the crossing of the 5% threshold of NDSA’s capital through the acquisition of CFDs rather than equity swaps and being tardy in declaring its intent to pursue acquisitions of NDSA shares and not to contribute to XPO’s takeover bid. Both counts were confirmed by the Court of Appeal, which simply lowered Elliott’s fine from €15 to €14 million. This blog post specifically discusses the declaration by Elliott of CFDs instead of equity swaps.
