Parmalat

Update march 2012

European investors have been excluded from the US securities class action against American defendants. Deminor has grouped investors with the objective of recovering their losses through European actions. Various actions have been launched in Italy against banks and auditors who played a leading role in the case.

 

A group of European institutional investors advised by Deminor has filed a collective action to recover losses they suffered on their Parmalat investments. The named defendants are various entities of Deloitte Touche, Grant Thornton, Citibank, Bank of America, UBS, Nextra, Morgan Stanley and Deutsche Bank.

Until 2008, European investors had been seeking to recover their losses through a U.S. class action. The judge overseeing the class action has, however, excluded European investors from most of the claims pending in the U.S. proceedings for jurisdictional reasons. For this reason, European investors have no other choice but to seek recovery through a European action.

 

Apart from the group action for institutional investors, Deminor advises a group of approximately 4,000 retail investors, most of whom are members of the Italian consumer organisation Altroconsumo. Actions have been filed on behalf of this group against the same aforementioned defendants. A first settlement was entered into in August, 2011, with Deutsche Bank, UBS and Morgan Stanley.

 

The actions have been closed for registrations, which means that no investors can join the pending litigation.

Background
In the securities class action In re Parmalat Securities Litigation, pending before the Southern District Court of New York, the Court has ruled on July 24, 2007 that Parmalat bondholders and shareholders who did not purchase their Parmalat securities in the U.S. are excluded from the U.S. class action with respect to claims against Citibank, Bank of America, Deloitte Touche (U.S. and International) and Grant Thornton (U.S. and International).

The Court's decision was based exclusively on jurisdictional issues, as it had already decided at an earlier stage that the Lead Plaintiffs' Complaint adequately pleads a cause of action against these defendants for their participation in numerous schemes to defraud Parmalat investors.

American investors or investors who purchased their securities in the U.S. (who only constitute a minority of Parmalat investors) can, however, continue to pursue their claims against these defendants and "New" Parmalat. The U.S. Court's decision prevents European investors from seeking recourse against these defendants in the ongoing class action. The only way for European investors to seek recovery from these banks and auditors is through a European action. It is important to stress that the benefits of a European collective actions are not automatically extended to all investors and, therefore, you need to join the action in order to be entitled to damages.

Legal action
The European collective action has been filed against the auditors - Deloitte Touche (U.S. and International) and Grant Thornton (U.S. and International) -, and against the banks - Citibank, Bank of America, UBS, Nextra, Morgan Stanley and Deutsche Bank. Pieces of evidence prove that the above mentioned entities have participated to numerous schemes aimed at defrauding Parmalat investors, hiding from the market relevant information on the real financial status of the Parmalat group on the one hand and contributing, on the other hand, through a number of transactions to further deteriorate the situation.

Only investors who are part of the European action are entitled to benefit from a possible settlement or award of damages.