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Marionnaud, which at the material time was managed by Marcel Frydman, its chairman and chief executive, and by Gérald Frydman, managing director, chief financial officer and the person named in the registration documents as being responsible for disclosure, delayed the publication of the company's results on three occasions until 30 June 2004. On 17 December 2004, Marionnaud finally announced "error corrections" in the amount of €93 million at 30 June 2004. The AMF General Secretary decided on 3 January 2005 to open an investigation into Marionnaud's financial disclosures and trading in its shares.
In a decision dated 5 July 2007, the AMF Enforcement Committee, having regard to the particularly serious act of disclosing false and misleading financial information to the public, issued the following financial penalties:- €1 million against Marcel Frydman;
- €500,000 against Gérald Frydman;
- €500,000 against Marionnaud;
- €100,000 against KPMG;
- €40,000 against Yves Gouhir, statutory auditor and partner responsible for the Marionnaud account at KPMG.
It cleared Cofirec and its partner Gérard Caro, Marionnaud's statutory auditor.
The complaint against Marionnaud, its two senior executives at the time and one of its statutory auditors is that in 2002, 2003 and 2004 they disclosed false information about the assets and liabilities and the financial situation of the company, with regard to accounting entries for retail discounts and supplier contributions to advertising. These discounts are vitally important to retailers because they have a significant and direct impact on their results and sales. The accounting irregularities noted by the Enforcement Committee resulted in restatements totalling €82 million.
The Enforcement Committee considered that Marcel Frydman, Marionnaud's founder, was directly responsible for the organisation and operation of the company and also for the increases in the supplier contract data. In view of his functions, therefore, he knew or ought to have known that the accounting information being passed on was false.
With regard to Gérald Frydman, the Enforcement Committee took into account his lack of action to identify and prevent the accounting irregularities, since these should have been compared against the exceptionally large restatements they entailed.
For Marionnaud, the Enforcement Committee applied the principle of ongoing corporate responsibility, considering that the infringements had been committed in its name and on its behalf and that the ex ante change of shareholders and management was not material. However, the committee did take into account that the infringements were directly related to the personality of the former executives, particularly Marcel Frydman, and to the way he conceived of his role, and that the new managers had taken steps to ensure that such misconduct would not reoccur.
Regarding the liability of Marionnaud's statutory auditors, the Enforcement Committee dismissed the complaints against Cofirec and Gérard Caro who, as co-statutory auditors, were not personally responsible for auditing and controlling accounting entries relating to discounts, except simply in connection with statutory auditors' cross-checks. The committee found that, in the matter at hand, Cofirec and Mr Caro had neither the resources nor the possibility on their own to detect the irregularities affecting the company's accounts. Because of the division of tasks between the co-statutory auditors, KPMG and Yves Gouhir were responsible for the contested accounting entries, and the Enforcement Committee considered that they had disclosed information which they should have known to be incomplete, inaccurate and misleading.
This decision can be downloaded (in French only) from the AMF website at: www.amffrance.org.>Sanctions>Décisions . It may be appealed in accordance with Articles R. 621-44 to R. 621-46 of the Monetary and Financial Code.
