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 and 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.
FOREX (U.S. & EU)
Relevant Period: January 1, 2003 – May 1, 2014
It is alleged that 12 banks have conspired to manipulate the foreign exchange rates, whereby doing so they have diminished the plaintiffs’ returns in trades, pension plans and savings accounts. It is alleged that the traders from the accused banks fixed currency rates, having shared confidential information in private chat rooms; and that the bank employees colluded to trade in ways that would result in favorable fixed rates. DRRT has been monitoring the US case and is preparing potential recovery action outside of the US.
Fortis SA/NV now Ageas SA/NV (NL)
ISINs: BE0003801181, BE0974264930, NL0000300838, US00844W1099, US34956J3095
Relevant Period: May 29, 2007 – October 14, 2008
Prior to its collapse and subsequent government bailout in October 2008, Fortis S.A./N.V. & Fortis N.V. (now Ageas S.A./N.V. and Ageas N.V.) was the largest financial services company in Belgium, providing retail banking, asset management, private banking, merchant banking, and insurance services to personal, business, and institutional clients, and was a major financial industry player in the BeNeLux and other European countries. Executives at Fortis materially misled investors with numerous public disclosures that were made in connection with the September 2007 Rights Issue used to raise capital to fund the acquisition of ABN Amro Holding NV. Only three days after Fortis announced a capital increase in the amount of €8.3 billion, the governments of the Netherlands, Luxembourg and Belgium agreed on a bailout of Fortis, which resulted in the takeover of major parts of Fortis by these governments. On August 3, 2012, Ageas S.A./N.V. and Ageas N.V. merged, forming an entirely Belgian entity. On March 14, 2016, Stichting Investor Claims Against Fortis reached an agreement with Ageas NV/SA pursuant to which Ageas will pay an amount of €1.2 billion to eligible shareholders covered by the settlement. This is the largest settlement of investors’ claims in Europe so far.
Relevant Period: January 1, 2007 – December 31, 2012
It is alleged that various panel banks manipulated (“rigged“) LIBOR and EURIBOR rates for several years, by submitting, at times mostly from 2007 on, artificially low rates to falsely convey the impression that the banks were in a better financial condition than they actually were and to pay lower interest rates on LIBOR/EURIBOR-based financial instruments and products that they sold to investors, thereby causing damages for these investors. Moreover, it is alleged that the banks, at times mostly before 2007, also manipulated LIBOR and EURIBOR to benefit their own books and trading positions, by artificially inflating or depressing the interest rates, which – given the large amounts of trades at stake – resulted in substantial financial gains for the manipulating banks. DRRT has been monitoring the US case and is preparing potential recovery action outside of the US.
Mitsubishi Motors Corporation
ISINs: JP3899800001; SEDOLS: B175XZ0, 5507409, 6598446, B3DTT96, BHZL4T3, B02JD27; CINS: J44131167
Relevant Period: Jan 01, 2011 – April 30, 2017
On Wednesday, April 20, 2016, former Mitsubishi Motors Corporation (“Mitsubishi“ or the “Company“) President Tetsuro Aikawa admitted to the public that the Company has been cheating Japanese emissions tests since at least June 2013. On news of this scandal, Mitsubishi’s common stock (ISIN: JP3899800001) dropped 15%, closing trading that day at ¥733 ($6.74) per share, representing a market cap loss of $1.2 billion. Further news emerged on April 21 and 22, 2016, pushing Mitsubishi’s stock price down to ¥504 ($4.53) per share by close of business on Friday, April 22, 2016, representing a total market cap loss of approximately ¥345,038,364,000.00 ($3,161,056,821.43) since the initial disclosure of April 20, 2016. Thereafter, on April 26, 2016, Mitsubishi made the shocking disclosure that its emission testing fraud extended back 25 years, to 1991. By the end of the day on April 27, Mitsubishi was trading at only ¥422 (down from ¥864 on April 19th, the day before the scandal erupted). On May 9, it was revealed that Mitsubishi had been using the improper testing methods on all models of its cars. In the aftermath of the news of the scandal, the Company’s investors lost more than 50 percent of the value of their investment with its market capitalization declining by ¥435 billion ($4.1 billion). The loss in market capitalization after the initial disclosure on April 20, 2016 is directly related to the disclosure of the cheating scheme, as such drastic fluctuations were not normal in the lead-up to the revelation. The per share price drop of ¥442 (¥864 to ¥422) from the time of disclosure on April 20 until close of trading April 27 in Tokyo represents a 51% decline and was sparked by extreme market volatility in Mitsubishi stock. Daily trading volumes on April 20 and 22 saw extreme excess trading above average daily volumes for the prior 120 days. An internal investigation revealed that the Company had been notified of the problems by numerous employees, dating back to at least February of 2005. As such, the Company’s financial statements, annual and quarterly reports, and other public disclosures contained false and misleading information and omitted material information about the company. DRRT has retained local counsel Koga & Partners, our partners in the historic ¥11 billion Olympus settlement as well as the ongoing Toshiba case. An initial complaint against Mitsubishi was filed on June 26, 2017, alleging over ¥18 billion ($160 million) on behalf of 120 institutional investors.
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. DRRT together with its local Italian counsel is preparing to file a complaint in the Court of Milan and have already initiated out-of-court actions.
SNS REAAL NV (NL)
ISINs: NL0000390706 and various bonds
Relevant Period: May 18, 2006 – February 1, 2013
SNS REAAL NV (“SNS“) faced substantial financial instability when the Dutch government announced they would nationalize the company on February 1, 2013. Before the 2008 credit crisis, SNS had acquired a number of toxic real estate investments and incorporated them into their Property Finance Branch. Combined with the financial instability in the commercial real estate sector and due to capitalization rules throughout the EU affecting all banks, SNS had been facing increasing capitalization issues without disclosing them until summer 2012. All shares, capital securities issued by SNS REAAL NV to Stichting Beheer SNS REAAL, and subordinated bonds were expropriated for the benefit of the Dutch State. Moreover, the law provided that all shareholders would be dispossessed of any potential rights, including compensation rights, against SNS and its management in connection with the purchase or sale of SNS shares leading up to the nationalization. However, the Council of State decided that holders of the securities and capital components have a right to compensation by the State at the level of the actual value of the affected enterprise at the time of the expropriation. A Dutch foundation will be set up in the coming months under Dutch Sec. 3:305a of the Dutch Civil Code.
Tesco PLC (UK)
Relevant Period: January 1, 2012 – November 30, 2014
Tesco PLC (“Tesco“) is a UK-based and LSE-listed grocery retailer with stores in 12 countries worldwide having annual sales of an average of £68.5 billion over the last 5 years and average group profits of about £3.587 billion over the same time span. On August 29, 2014 Tesco published a partial disclosure (profit warning) leading to a heavy trading volume of £130.29 million amidst the big sell-off by a major investor. On September 22, 2014, Tesco disclosed that it had overstated its expected profits for the first half of 2014 by £250 million, because it improperly accelerated the recognition of income while at the same time delaying the accrual of certain costs. On October 23, 2014, Tesco published its earnings statement, disclosing and confirming the overstatement of profit figures, an overstatement eventually increased by an independent investigator. Following the disclosures, Moody’s Credit Agency downgraded Tesco’s short and long-term credit rating as well. Overall, Tesco’s stock price fell from £246 in August 2014 to £169 in October 2014, representing over £10 billion in market capitalization losses. DRRT together with its litigation partners are evaluating all potential avenues for an efficient recovery of the investors’ losses.
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.
Petrofac Limited (UK)
ISIN: GB00B0H2K534 (common stock)
Relevant Period: January 1, 2013 – May 31, 2017
Petrofac Limited is a provider of oilfield services to the international oil and gas exploration industry, headquartered in London. On May 12, 2017, the UK’s Serious Fraud Office (“SFO“) announced launching a criminal investigation into Petrofac over suspicions of bribery, corruption and money laundering and related to an ongoing SFO investigation into Unaoil, a Monaco-based consultancy that worked with Petrofac, primarily in Kazakhstan between 2002 and 2009. Petrofac’s COO Marwan Chedid resigned after being suspended until further notice on May 25. Both he and CEO Ayman Asfari had been arrested and questioned under caution by the SFO before being released without charge. Petrofac shares fell after the SFO investigation was announced and further when Petrofac announced suspending Chedid. The shares have fallen over 50% since May 12, and 30% alone to 389 pence on May 26, 2017, causing significant losses to the shareholders. A consortium of law firms and funders, including DRRT, are investigating potential legal remedies against Petrofac in the UK for losses incurred by investors as a result of the conduct under investigation.
JBS S.A. (Brazil)
ISIN: BRJBSSACNOR8 (Common Stock)
Relevant Period: March 27, 2007 – May 31, 2017
The proposed arbitration is based on JBS’s false and/or misleading statements and failure to disclose that its growth (including its initial issuance of stock in 2007) towards becoming the world’s largest meat packaging company is based on bribery and corruption, specifically the illegally obtained financing obtained through kickbacks to Brazilian state-owned National Economic and Social Development Bank (BNDES) and its subsidiary BNDESPar since 2005. When details emerged of a plea deal that JBS executives Joesley and Wesley Batista made with Brazilian prosecutors on May 19, 2017, it caused JBS’s share price to drop 31.3% from R$8.71 on May 19 to R$5.98 on May 22. Joesley Batista admitted that he and his brother paid $220 million overall in bribes, with most of the money being funneled into Brazilian political campaigns. JBS and other companies under the umbrella of holding company J&F Investimentos S.A. were the biggest campaign contributors in the Brazilian 2014 elections. This case is still developing with ongoing investigations by the Brazilian Securities and Exchange Commission (CVM). Furthermore, JBS executives admitted to bribing regulators and politicians to overlook food inspections of its meat processing and packing plants and to ignore JBS’s unsanitary practices, such as processing rotten meat and operating plants containing traces of salmonella. A two-year investigation by Brazilian police culminated in a raid on March 17, 2017, of dozens of meat processing plants. When JBS stated in a securities filing on that day that three of its plants and one of its employees were targeted in the probe, JBS’s shares fell over 10% from R$11.99 to R$10.72 per share. The full extent of the fraud emerged only two months later when it was disclosed that the bribery and corruption practices did not only extend to the inspection of meat, but that the entire company was built on such practices since its IPO in 2007.