Banca Monte dei Paschi di Siena SpA (IT)
ISINs: IT0005092165, IT0004984842, IT0001334587, IT0004359359, IT0003455497; CUSIPs: 05951A303, 05951A105, T1188A116
Relevant Period: January 2, 2008 – May 13, 2016
Investors suffered losses due to the concealment of the losses created by various transactions entered into by the Bank and its management in order to artificially inflate its balance sheet. The concealment of the losses was done by entering into derivative contracts with third parties, where these contracts were neither fully reported on the bank’s accounts nor fully disclosed on the 2009 financial statement. The derivative contracts and related documentation were discovered and made public by the new board of the bank at the end of November 2012. During the timeframe from January 2, 2009 until November 14, 2012 the stock price dropped from € 33.52 to € 5.11, a loss of € 28.11 per share, a loss of more than 80%.
On December 15, 2016, DRRT’s clients joined the criminal case against the indicted defendants as civil parties, bringing a claim for their collective holdings of 30 million BMPS common stock.
BlackBerry Limited (CA)
This case against BlackBerry Limited (“BlackBerry”), a technology company that provides telecommunication solutions, concerns BlackBerry’s accounting practices in respect of revenues recognized on the BlackBerry 10 devices and the impact of such accounting practices on BlackBerry’s financial statements for the fiscal year 2012 (released on March 28, 2013) and Q1 2013 (released on June 28,2013). BlackBerry recorded revenues on the BlackBerry 10 when they were shipped into distribution channels even if the sales price was not fixed or determined yet. These revenues recognized on those devices were falsely inflated and materially misleading. Nevertheless, the revenues were used to create the write-downs. This false revenues led to a violation of U.S. GAAP and BlackBerry’s own accounting principles. In December 2013, DRRT filed statement of claim against BlackBerry Limited and the former CEO Thorsten Heins and former CEO Brian Bidulka in the Ontario Superior Court of Justice, Canada.
Hypo Real Estate Holding AG (DE)
Hypo Real Estate Holding AG (“HRE”) is alleged to have misinformed the market about its U.S. subprime exposure in the inherent risk in the acquisition of Depfa. HRE’s stock experienced large losses following its January 16, 2008 statement that it had to write down €390 million to cover the U.S. subprime exposure and even more by the time it had to be rescued by the German government in October 2008. On January 15, 2009, DRRT filed a case on behalf of institutional investors with more than €900 million in claims against Hypo Real Estate Holding AG at the Regional Court Munich, Germany. HRE I is covering the relevant period July 11, 2007 – January 15, 2008, while HRE II is covering the relevant period January 15, 2008 – October 4, 2008, the latter has been stayed. HRE I is currently pending at the German Supreme Court (Bundesgerichtshof).
Petróleo Brasileiro S.A. (BR)
BRPETRACNOR9 (common stock), BRPETRACNPR6 (preferred stock)
Relevant Period: December 31, 2009 – August 15, 2016
Petróleo Brasileiro S.A. – Petrobras (“Petrobras”), one of the largest oil and gas companies in the world and formerly the largest corporation in Brazil in terms of revenue, has been involved in a major corruption and bribery (graft) scandal since 2014, affecting the correctness of its financial statements and public filings for at least the past 6 years. The disclosures of the extent of the bribes and corruption and their impact on the financial condition of the company have causes its U.S. as well as Brazilian equity securities (common and preferred) to lose over 72% since the scandal became public. Senior Petrobras executives have been accused of (and convicted of criminal actions) accepting bribes from construction companies in exchange for awarding inflated price contracts to them, allowing in return kickbacks to these companies as well as funneling illegal payments to the ruling party. The financial condition of Petrobras was particularly affected by recording construction projects at the (inflated) contract values as assets on its balance sheet (see notes to financial statements), instead of at their actual values, thereby illegally overstating asset values in the billions. This has been corrected in the meantime, by Petrobras’ announcement of corrections in assets to the tune of over $10 billion. Moreover, Petrobras violated its representations to its shareholders concerning its self-imposed Code of Ethics covering anti-corruption and anti-bribery practices. On May 13 and August 20, 2015, DRRT filed cases for various institutional investors against Petrobras and individual defendants in the U.S. District Court of New York for damages resulting from investments in U.S. issues securities (ADR and U.S. bonds). These individual cases settled in the beginning of 2017. In August 2016, local counsel filed a request for arbitration with the Market Arbitration Chamber (MAC), the arbitration institution of the Brazilian Stock Exchange, afterwards two requests for joinders were filed, bringing the total of all claims to be between $380 and $660 million in inflation/rescission damages. Arbitration proceedings on the merits are likely to begin in August 2018.
Porsche Automobil Holding SE (DE)
DE0006937733 (Porsche preferred stock, old ISIN), DE000PAH0038 (Porsche preferred stock, new ISIN since Sept. 1, 2008)
Relevant Period: June 6, 2008 – September 25, 2015
In September 2015, the U.S. Environment Protection Agency issued a notice of violation of the Clean Air Act against Volkswagen AG (“VW”) and other affiliates, resulting in a potential fine of up to $18 billion ($37,500 per vehicle and infraction, covering 482,000 vehicles in the United States). On Sunday, September 20, 2015, VW admitted to installing a so-called “defeat device software” in various 2.0 liter diesel engine models, which dramatically reduces the nitrogen oxide (NOx) emissions of diesel cars during the testing, thereby distorting the outcome of official emission tests. On Tuesday, September 22, 2015, VW admitted that 11 million diesel-powered vehicles were affected worldwide. Porsche Automobil Holding SE (“PHSE”), as its owner, has inevitably had knowledge of VW’s manipulation practice within the scope of organizational fault.
On September 19, 2016, local counsel filed a case on behalf of 147 institutional investors of over €547 million in damages against PHSE at the Regional Court Stuttgart, Germany. The model case is currently pending at the Higher Regional Court of Stuttgart.
Porsche Automobil Holding SE (Market Manipulation) (DE)
It is alleged that Porsche Automobil Holding SE (“PHSE”) and its former officers Mr. Wiedeking and Mr. Härter systematically lied to and misled the market regarding its true intentions to take over and dominate Volkswagen AG (“VW”), and that VW tacitly went along with this misrepresentation by violating its own duties to publish insider information related to a possible or planned take-over by PHSE. In March 2008, PHSE rejected any rumors it was seeking a control and domination of VW as pure speculation, but then went on to secretly build a combined equity and option portfolio with control over 74.1% in VW shares before disclosing on October 26, 2008 that it had that much control and was now seeking to dominate VW. In 2011, two cases on behalf of institutional investors from around the world with over €2.1 billion in damage claims were filed against VW and PHSE at the Regional Court Braunschweig, Germany. On April 13, 2016, the Regional Court of Hanover designated this case as a model case proceeding, and consequently stayed all cases filed based on the same facts and circumstances. The model case is pending at the Higher Regional Court of Celle.
Saipem SpA (IT)
Relevant Period: January 2, 2007 – December 31, 2013
Investors from around the world incurred losses as a result of Saipem’s ongoing misinformation of the market and its untimely disclosure of the correct, relevant information, which led to significant stock drops in December 2012, January 2013 and June 2013. In sum, Saipem misled investors over time about the financial impact and risk stemming from uncertain, bribery-procured, high-margin contracts, which produced substantial, negative consequences to Saipem’s 2012 and 2013 earnings. The financial consequences of Saipem’s illegal behavior in years prior and the deliberate misinformation of the market surfaced mostly in the financial year 2013 and relate to Saipem’s involvement in North African corruption to procure lucrative contracts over the years from 2007 to 2010, including allegations and evidence of bribes being paid by and through Saipem subsidiaries in Algeria, in order to win a series of contracts worth around €8 billion.
On Monday, December 4, 2017, DRRT filed a complaint against Saipem and former officers Mr. Pietro Franco Tali and Mr. Umberto Vergine, in the Court of Milan. The complaint was filed through our Italian co-counsel on behalf of over 25 institutional investors claiming over €300 million in damages. The first hearing took place on June 5, 2018, where the judge set a briefing calander. Also on Monday, December 4, 2017, DRRT sent a demand letter to Saipem, as well as former officers Mr. Pietro Franco Tali and Mr. Umberto Vergine. The letter is asking for damages on behalf of over 140 institutional investors. Additionally, the letter will serve to re-start the statute of limitations for an additional five years.
Toshiba Corp. (JP)
Relevant Period: March 31, 2008 to April 22, 2016
Toshiba Corp. (Toshiba) engaged in years of organized, top-down accounting fraud of an extent of over $1.2 billion going back to at least 2008 and continuing until it was caught in Q2/2015. On July 20, 2015, an independent investigation committee disclosed that Toshiba had overstated its operating profits by $1.22 bn. The report further confirmed that the fraud inside of Toshiba was organized and mostly coming from the lack or delay in reporting substantial losses connected to its infrastructure, semiconductor, personal computer and television business divisions. The report further documented that Toshiba’s President and Vice Chairman were aware of the profit overstatements and the delays in loss reporting, and had pushed their subordinates to meet unachievable financial targets.
On December 7, 2015, Japan’s Financial Services Agency (FSA) recommended a fine of ¥7.37 billion ($60 million) for Toshiba’s accounting-related violations, a record in Japan. The activities of the Japanese FSA further underscore the gravity of the accounting fraud at Toshiba and leave no doubt of its liability also for resulting investor losses.
DRRT is offering qualifying institutional investors the opportunity to participate in a risk-free, fully funded and insured, contingency-fee basis representation. The first complaint was filed on June 22, 2016, for a group of 45 institutional investors totaling nearly $150 million in damages. A second complaint was filed on April 3, 2017, claiming approximately $400 million on behalf of 70 international and Japanese institutional investors. On June 13, 2017, the court consolidated both actions, which will now proceed concurrently. DRRT has retained experienced and reputable Japanese counsel Koga & Partners as local counsel. Koga & Partners already cooperated with DRRT in securing a landmark ¥11 billion out-of-court settlement in March 2015 relating to the 2011 Olympus $1 billion accounting fraud.
Vivendi S.A. (FR)
From at least 1998 through mid-2002, Vivendi engaged in a scheme to artificially inflate its share prices by materially and fraudulently misstating its financial results as well as its debt and liquidity situation. This rendered Vivendi’s financial statements and balance sheets published in its Annual Reports for all years between 1999 and 2001 materially false and misleading. Only shortly after the ouster of Vivendi’s then-CEO Jean-Marie Messier on July 3, 2002, did Vivendi disclose that, following an acquisition spree directed by Messier, Vivendi had amassed approximately $18 million in debt and was consequently facing a severe liquidity crisis. In order to avoid default on its largest credit obligations, the company was forced to immediately secure both bridge and long-term financing. In the wake of these announcements, the price of Vivendi’s common stock and U.S. ADRs plunged by nearly 25% and remained depressed for a substantial period of time. In 2012, local counsel filed a complaint against Vivendi Universal S.A. and its former CEO Jean-Marie Messier in the Tribunal de Commerce in Paris, France representing over 100 international institutional investors with collective damages exceeding €1 billion.
Volkswagen AG (DE)
DE0007664005 (VW common stock), DE0007664039, DE0007664062 (VW preferred stock), DE0006937733 (Porsche preferred stock, old ISIN), DE000PAH0038 (Porsche preferred stock, new ISIN since Sept. 1, 2008), DE0006757008 (Audi AG common stock), Debt securities guaranteed or issued by the VW Group
Relevant Period: June 6, 2008 – September 25, 2015
On Friday, September 18, 2015, the U.S. Environment Protection Agency (“EPA”) issued a notice of violation of the Clean Air Act against Volkswagen AG (“VW”) and other affiliates, resulting in a potential fine of up to $18 billion ($37,500 per vehicle and infraction, covering 482,000 vehicles in the United States). Only two days later, on Sunday, September 20, 2015, VW admitted to installing a so-called “defeat device software” in various 2.0 liter diesel engine models, which dramatically reduces the nitrogen oxide (NOx) emissions of diesel cars during the testing, thereby distorting the outcome of official emission tests. On Tuesday, September 22, 2015, VW admitted that 11 million diesel-powered vehicles were affected worldwide. In the meantime, Martin Winterkorn, VW’s CEO, has resigned. A group of VW employees and management personnel is currently being investigated by the German prosecutor’s office. Furthermore, VW has set aside € 6.5 billion for matters in connection with the defeat device. On Monday and Tuesday, September 21 and September 22, 2015, after VW admitted to fitting its U.S. diesel vehicles with the defeat device, VW common stock plunged from €167.40 to €111.20 (XETRA), VW preferred stock from €167.80 to €106.00 (XETRA), a loss of over €15 billion in market capitalization. The VW preferred stock closed at €106.00 (XETRA), its lowest in more than three years, down more than 50% from its €255.20 high (XETRA) on March 16, 2015.
On March 14, 2016, local counsel filed a case against VW on behalf of 278 institutional investors claiming €3.25 billion in damages in the Regional Court Braunschweig, Germany. On September 19, 2016, local counsel filed its second case on behalf of 263 institutional investors of over €1.25 billion in damages against VW at the Regional Court Braunschweig. On May 23, 2017, additional investors joined a third case against VW filed at the same court. The model case is currently pending at the Higher Regional Court of Braunschweig. This court chose the model case lead plaintiff pursuant to the KapMuG requirements and appointed an investor from our group. Hearings are set to start on September 10, 2018.