Relevant Period: January 2, 2008 – May 13, 2016Investors 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%. There are ongoing criminal investigations, and the Court of Milan is conducting preliminary hearings relating to the actions of certain individuals, after which indictments are expected against Banca MPS and several of its (former) officers (13 in total) for the alleged illegal transaction which caused harm to the company and its shareholders. The Bank's former chairman and two other former top executives have already been sentenced to jail in Italy for misleading the regulators in relation to one of the deals.
Relevant Period: January 2, 2010 – August 4, 2014In March 2014, Espírito Santo Financial Group SA (“ESFG”) disclosed accounting irregularities at its parent holding company, Espírito Santo International SA (“ESI”). According to news reports, ESI management used Banco Espírito Santo (“BES”) and other affiliates to offload debt issued by various Espírito Santo companies onto unsuspecting investors. These fraudulent actions caused a major drop in the BES stock price. BES reported a €3.6 billion loss on July 30, 2014, lost access to European Central Bank funding on August 1, 2014, and its stock was suspended from trading when it became the subject of a bailout that separated BES into a “good bank” and “bad bank” to hold non-performing loans worth about €4 billion. DRRT together with its litigation partners are preparing a recovery action in Portugal.
Relevant Period: January16, 2007 – July 15, 2010BP plc (“BP”) continuously gave false statements to the market regarding its progress in (process) safety, the existence of adequate emergency plans, and its ability to respond to oil spills in the Gulf of Mexico. With its misstatements BP appeared to conduct its business in a safe and responsible manner and to implement the policies, procedures and recommendations detailed in the Baker Panel report designed to improve its process safety. The truth about safety rules, procedures, policies and attitude at BP only became known after the April 20, 2010 explosion at the Deepwater Horizon (“DWH”) oil drilling rig and BP’s subsequent struggle to contain the resulting oil spill while causing immense environmental and surrounding business damage, as well as liabilities and the loss of over £ 47.6 billion in its own market capitalization (BP’s share fell over 38.7% in the aftermath of the spill).
Relevant Period: May 29, 2007 – October 14, 2008Prior 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.
Relevant Period: Jan 01, 2011 - April 29, 2016 (subject to change)On Wednesday, April 20, 2016, 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 27th, Mitsubishi was trading at only ¥422 (down from ¥864 on April 19th, the day before the scandal erupted). On May 9th, it was revealed that Mitsubishi had been using the improper testing methods on all models of its cars. Since the scandal began on April 20th, the Company’s investors have 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 since 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 27th 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. The Japanese authorities initially gave Mitsubishi until April 27, 2016 (subsequently extended) to submit a report as to exactly what the cheating scheme entailed. Moreover, Mitsubishi will complete its own investigation with external advisers over the next 3 months. Both reports, similar to the Olympus and Toshiba cases, will provide an excellent basis for shareholder damage recovery litigation.
Relevant Period: December 31, 2009 – May 14, 2015Petróleo 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). In order to recover losses on investments in non-U.S. (i.e. Brazilian) securities, DRRT is assembling a group of large institutional investors to pursue damage compensation claims through mandatory arbitration in Brazil in front of the Market Arbitration Chamber of the BOVESPA. For this purpose, DRRT has already retained Brazilian law firm and experts in Brazilian law and put together a fully-funded cost-/risk-free concept for institutional investors to join together in a group arbitration in Brazil. DRRT is planning to initiate arbitration in Brazil before the end of 2015 on behalf of shareholders with well over $2 billion in damage claims.
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 $11 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.
Relevant Period: May 18, 2006 – February 1, 2013SNS 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.
Relevant Period: November 7, 2006 – December 19, 2014Japanese-based Takata misled investors by failing to disclose that there was a major design defect in the airbags it produced, which could cause - and in fact did cause – a dangerous explosion of metal pieces instead of deploying the airbag. Takata has known that the explosion risk might have been due to a serious design defect for more than a decade, when it began to acquire internal evidence and conducted tests. As a result of the non-disclosure, Takata's securities traded at artificially inflated prices starting already with its listing on November 7, 2006. The stock traded at an artificially inflated price because the hidden defect carried with it inherent risks (e.g. expensive and costly recalls, fines, lawsuits, and fewer sales or cancellations of orders, loss of consumer and business partner confidence in Takata’s products, resulting in less sales and profits) which would inevitably lead to investor losses if/when the truth came out. The inherent risks of the hidden defect are now being realized: in total, almost 34 million vehicles have been recalled worldwide; Takata is subject to a U.S. criminal investigation carrying with it a high risk of expensive penalties; and a consumer class action is pending in the U.S. DRRT is preparing a funded and insured risk-free litigation concept in Japan, a jurisdiction in which DRRT has experience from the Olympus case, where DRRT concluded with a record JPY 11 bn settlement as published in March 2015.
Relevant Period: January 1, 2012 – November 30, 2014Tesco 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.
Relevant Period: March 31, 2008 to September 11, 2015Toshiba is involved in its second accounting probe over a two-year period, this time relating to the accounting on infrastructure project costs and booking of construction related costs, as well as the overstatements of profits in general for a period of six years. Hence, Toshiba did not live up to its promise of taking "preventative measures" to prevent a re-occurrence of the prior accounting irregularities. This case looks similar to a large extent to the Olympus accounting fraud, which DRRT concluded with a record JPY 11 bn settlement as published in March 2015. Investor claims for common stock losses in Japan would be based on the Japanese Financial Instruments & Exchange Act (FIEA) which specifically protects investors against accounting irregularities and provides for an investor-friendly burden of proof. Since damages may be limited once the stock recovers, particularly on sold shares, it is important to take action within a reasonable time and DRRT is working with experienced and reputable Japanese counsel to represent institutional investors on a risk-free, fully funded and insured, contingency-fee concept.
Relevant Period: June 6, 2008 – September 25, 2015On 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.