LOS ANGELES — U.S. District Judge Howard Matz on Wednesday dropped the $700 million sanction placed in July against Artemis, the Paris-based holding company controlled by François Pinault, the French tycoon who controls Gucci Group through his PPR conglomerate.
Both Pinault and Artemis were accused of breaking California law when they purchased Executive Life’s valuable junk-bond portfolio from French bank Credit Lyonnais in the Nineties. At the time, California forbade banks from owning insurance firms.
State insurance commissioner John Garamendi sued Credit Lyonnais in 1999, alleging the bank used front companies to buy the failed insurance business and its junk-bond portfolio in the early Nineties. Pinault reaped huge profits from the sale of the bonds.
“This order addresses only the question of whether plaintiff John Garamendi is entitled to the judgment he seeks, which would include the $700 million punitive damages award. He is not,” said Matz in the order.
James Clark, an attorney for Pinault, said that while the punitive damage award is now out of the case, the judge has yet to rule on the remaining claims for restitution or other equitable relief, which would be paid to the commissioner.
In July, the judge approved a $600 million settlement the French government had reached on behalf of Credit Lyonnais with California insurance regulators. The jury in May cleared Pinault personally of any wrongdoing in the case, but found Artemis liable of conspiracy in the way in which the transaction was conducted. However, in July a Los Angeles jury said Artemis had to pay $700 million in punitive damages for its part in acquiring the Executive Life assets from Credit Lyonnais.