International investors are flexing their muscles in a suit against one-time financial services giant Fortis NV, now referred to as Ageas, which they are accusing of releasing misleading information about the company prior to its 2008 collapse.
The claim, filed in Utrecht Civil Court in the Netherlands alleges that between May 29, 2007 and October 14, 2008, the Dutch/Belgium firm made false representations to the market and its shareholders in an attempt to encourage them to continue investing despite knowing it was on the brink of a massive downfall. The claim argues that the former financial service company, failed to disclose accurate information about its exposure to sub-prime mortgages in the US while preparing for a large share issue during the summer of 2007 to fund the acquisition of ABN AMRO Bank.
Prior to its collapse in 2008, Fortis was the largest financial services company in Belgium and the Netherlands. Headquartered in Brussels, Fortis was a joint venture by two parent companies, Fortis SA.NV in Belgium and Fortis NV in the Netherlands. In October 2008, Fortis, had to be bailed out by the Dutch, Luxemburg and Belgian governments. As a result, the company was broken up and many of its most valuable assets were sold to third parties by the governments.
‘This [is the] appropriate reaction to the fraud perpetrated by Fortis against investors who relied upon the integrity of the market and the compliance of Fortis with its legal obligations,’ says Alexander Reus, director of the special foundation representing the group of directors.
The Foundation, which was formed past June, said that it is currently being backed by Grant & Eisenhofer and Barroway Topaz, US securities law firm, more than 130 institutional investors from Europe, the Americas (including the US) and Asia who allegedly lost tens of billions of euros, with some investors loosing as much as 90 per cent on their Fortis investments.
Moreover, the Foundation’s response to this lawsuit marks an important step in pursuing international security claims in light of last year’s US Supreme Court decision in Morrison v National Australia Bank (NAB), which has been ruled as a class action by ‘foreign investors who have bought a stake in foreign companies on foreign stock markets.’
In a release, Barroway Topaz partner Stuart Berman coined the Foundation as a ‘historic new vehicle to address shareholder rights in the European market,’ he added, ‘We anticipate that there will be substantial damage claims in conjunction with the findings of liability on the part of Fortis.’
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