Regulator mulls $9bn Daimler fine
German markets regulator BaFin is reviewing whether to impose fines after it found that transactions to buy a 9.69% stake in Daimler on behalf of Li Shufu, chairman of Chinese car maker Geely, should have been disclosed earlier.
German markets regulator BaFin is reviewing whether to impose fines after it found that transactions to buy a 9.69% stake in Daimler on behalf of Li Shufu, chairman of Chinese car maker Geely, should have been disclosed earlier.
Li disclosed on February 23 that he had amassed a $9bn investment in the German car maker using banks, shell companies and derivatives, prompting questions in Berlin’s political circles about the adequacy of German disclosure rules.
Li, who controls car maker Volvo, revealed that he had control over almost 10% in rival Daimler, parent company of luxury brand Mercedes-Benz, even though German rules require investors to reveal if their stake exceeds the 3%, 5% and 10% thresholds.
DISCLOSURES AMENDED
“Voting rights disclosures by Shufu to Daimler should have been reported on February 22,” BaFin said on Saturday. The regulatory disclosures have since been amended to reflect the earlier date of February 22 rather than February 23, BaFin said.
“Whether this could also be relevant in regard to fines is something we are looking at,” BaFin said, adding that the maximum fine to be paid by private individuals who violate disclosure rules could be €2m, and for companies €10m, or 5% of annual revenue.
BaFin asked Morgan Stanley, as part of the Geely deal, to correct a disclosure filing, according to a letter from Germany’s finance ministry, which was seen by Reuters. Germany’s finance ministry, which oversees BaFin, declined to comment on this specific case.
Investment bank Morgan Stanley, which held Daimler voting rights that would later pass on to Li, has amended its disclosure filing to reflect the new date, the letter said.
A spokeswoman for Morgan Stanley declined to comment.
Frankfurter Allgemeine Zeitung was first to report the existence of the letter.
Morgan Stanley was part of a group of banks that helped Geely’s chairman buy a stake in Daimler in a way that helped avoid early disclosure.
Geely said on Saturday that it had informed markets in a timely fashion.
“The capital market was at all times informed about the correct number of voting rights,” Geely said in a statement.
VOTING RIGHTS DISCLOSURES BY SHUFU SHOULD HAVE BEEN REPORTED ON FEBRUARY 22 RATHER THAN FEBRUARY 23
“However, BaFin has asked Geely to make an additional disclosure for 22 February 2018 based on a new interpretation of the legal provisions by BaFin which was published for the first time on 9 May 2018,” Geely said.
Reuters reported on February 6 that Geely had bought Daimler shares and was intent on building a stake after being rebuffed by Daimler in late 2017. BaFin at the time said the stake would have to be disclosed if it was bigger than 3%.
Reuters later revealed that Geely had been building the stake over a period of months.
Elisabeth Roegele, BaFin’s chief executive director of securities supervision, told Reuters that BaFin was reviewing a request for information about the size of Geely’s Daimler stake made by Reuters in the first week of February.