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French court convicts Warner head Bronfman

A French court has fined Warner Music Group CEO Edgar Bronfman Jr. $6.7 million for misleading investors about the Vivendi media conglomerate when he was a top executive there.
/ Source: news services

A French court, in a surprise ruling, on Friday convicted and fined Warner Music Group chairman and CEO Edgar Bronfman Jr. for insider trading and former high-flying Vivendi CEO Jean-Marie Messier for misusing company funds and misleading investors.

Bronfman, a former executive vice president of Vivendi Universal, was fined 5 million euros ($6.7 million) and given a 15-month suspended sentence for insider trading around the Vivendi media conglomerate when he was a top executive there. Messier was handed a three-year suspended prison sentence and a 150,000 euro fine.

Messier was acquitted of charges that he manipulated Vivendi's stock price during his leadership of the company. His conviction misusing company funds related to a 20 million euro severance package that he eventually renounced.

Messier and Bronfman plan to appeal.

Two other former Vivendi executives, Eric Licoys and Guillaume Hannezo, were given suspended prison sentences. Three others on trial were acquitted.

The conviction came even though the prosecutor had recommended acquittal following the high-profile Vivendi trial last year. She said the executives did not have enough information themselves about the company's health, and didn't dupe anyone.

Messier was a star of the French business world during his 1996-2002 reign at Vivendi, when the company expanded from the water utility Generale des Eaux into a major media group.

However, Vivendi's shares lost more than 80 percent of their value as the company ran up billions of dollars of debt in making acquisitions including the Universal film studios and music label in the United States.

By the time Messier left, Vivendi Universal was swamped under 35 billion euros in debt — prompting the company to sell off many of its businesses, including Universal, to right itself.

Messier was sacked by Vivendi's board of directors in 2002 and the company underwent drastic restructuring.

In a similar trial in New York, the U.S. District Court in Manhattan ruled a year ago against Vivendi SA and in favor of U.S. and European shareholders who said the media group lied to the public about its shaky finances. The court ruled that Messier himself was not liable.