French Regulator Dismisses Covéa Market Abuse Charges Filed Against SCOR’s Kessler

May 28, 2021 by

France’s financial markets regulator dismissed market abuse charges, which had been filed against SCOR’s Chairman and CEO Denis Kessler by the reinsurer’s largest shareholder, Covéa.

The investigation “does not support allegations of market abuse,” said a statement issued by “Autorité des marchés financiers” or AMF.

This is just the latest legal skirmish between the two companies — a saga that began in 2018 when Covéa, the Paris-based mutual insurer, initiated a hostile takeover of SCOR. Covéa abandoned its bid in early 2019.

Covéa filed the complaint against Kessler on March 24 of this year “for market manipulation and misuse of corporate assets” when SCOR repurchased its own shares between Oct. 25, 2018 and Dec. 10, 2018.

In part, the Covéa complaint accused SCOR of artificially inflating its share price when it initiated “a massive share buyback of around 4.6 million SCOR shares for €195 million.”

On the same day that Covéa filed its complaint with the AMF, SCOR quickly countered with a press release, questioning what had led Covéa “to file this complaint, more than two years after it became aware of the facts it pretends to report”

Addressing the charge of market manipulation, SCOR said its share buy-back program was announced to the market on July 27, 2017, during a time when Covéa’s CEO Thierry Derez was still a director of SCOR — more than one year before the takeover attempt. (Derez was forced to resign from SCOR’s board in November 2018 as Covéa at the time was in the midst of its hostile takeover.)

“It is therefore absolutely groundless and deceitful to suggest that it was initiated as a result of Covéa’s offer,” said SCOR.

On Nov. 10, 2020, the Paris Commercial Court ruled that Derez committed a breach of his obligations as a director of SCOR as a result of “disloyalty” and “conflicts of interest.” SCOR said in March that Derez “disclosed confidential SCOR information and documents to Covéa and its advisors with the aim of wrongfully favoring the preparation and implementation of an unsolicited takeover of SCOR by Covéa.”

This ruling is being appealed by Covéa. “If this ruling sets a precedent, it would significantly limit the directors’ rights in exercising their mission to defend, freely, the corporate interest of a company and its shareholders,” said the insurer in statement issued on Nov. 10 last year.

And there are more legal actions to come. A criminal trial against Derez and Covéa – for breach of trust and concealment of breach of trust, respectively – is scheduled for July 5 and 6, 2021, in front of the Paris Criminal Court.

In addition, SCOR is suing Barclays in London for breach of confidence when the bank advised Covéa on its bid to acquire SCOR in 2018.

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