SWEDEN - Carnegie's shareholders, which includes the First Swedish National Pension Fund (AP1), have voted against discharging the former board and chief executive from liability relating to the overstatement of trading positions,  and provided the current board with an opportunity to take legal action.

Shareholders reached the minimum 10% required of all the company's shares and voted at Carnegie's annual general meeting (AGM) against discharging former board chairman Christer Zetterberg, former board members Hugo Andersen, Niclas Gabrán, Anders Ljungh, Dag Sehlin and Fields Wicker-Miurin and former CEO Stig Vilhelmsson from their liabilities.

The vote follows an investigation last year by the Finansinspektionen (FI), the Swedish Financial Supervision Authority, which found "serious deficiencies" in the management and control of Carnegie Investment Bank, a wholly-owned subsidiary of Carnegie. (See earlier IPE story: Carnegie faces losing its licence)

The FI fined Carnegie SEK50m (€5.3m) - the maximum financial penalty - and ordered the firm to replace Vilhelmsson as CEO. (See earlier IPE story: Carnegie EGM votes on new chair) and the nominating committee, of which AP1 is a member, subsequently replaced nearly the entire board of the parent company at an Extraordinary General Meeting (EGM) in November.

AP1 said the question of whether to discharge the liability was an important one as it "gives signals about the responsibilities of a board and CEO", and it pointed out as the same individuals served on the boards of both the investment bank and the parent company, "it is therefore obvious that if the subsidiary's board is to be denied discharge from liability, the same must apply to the parent company".
That said, the current board - including Mai-Lill Ibsen who had served as a director on the previous board for only a few weeks when the overstatement of trading positions was discovered in May 2007 - have been granted full discharge for 2007. 

Following this latest shareholder vote, the new board of Carnegie has initiated an inquiry to investigate the viability of filing a lawsuit against the former board and CEO and the probability of recovering any damages, as the overstatement of positions led to a reduction in net profit of SEK227m between 2005-07, of which SEK101m referred to 2007.

However, because the investigation is still in progress, AP1 pointed out there is "not sufficient information at present to determine whether or nor it is possible to sue for damages".
In the meantime, it said the board should move forward with the inquiry and when sufficient information is available, it should then decide whether or not a lawsuit should be filed, with the decision based on the likelihood of winning the lawsuit and its probable outcome.

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