EUROPE - Institutional investors are backing a group of 4,000 Parmalat investors who lost money in the Italian dairy firm's collapse by launching legal action against certain banks and international auditors in the case.
Deminor, the corporate governance consultant, today announced the group, backed by institutional investors, are launching new action for damages in Italy against the international auditing firms and banks following the investors' exclusion from the US class action.
Aside from the four four banks and auditors targeted previously, UBS, Nextra (currently Eurizon), Morgan Stanley and Deutsche Bank have now also been named in the new action for "hiding from the market relevant information on the real financial status of the Parmalat group [...] and contributing [...] to deterioration of the situation".
The group already sued the Italian auditing firms Deloitte & Touche and Italaudit before the civil court of Milan in 2006, but no banks or international auditing firms were brought as defendants since they had already been sued in the pending US securities class action.
Then on July 24 last year, the judge overseeing the US class action ruled non-American purchasers of Parmalat securities would not be entitled to continue pursuing their claims against four US-based defendants - Deloitte & Touche (US and International), Grant Thornton (US and International), Citibank, and Bank of America.
"This effectively implies that European investors cannot seek recourse against these defendants in the ongoing class action and that any settlement that will be reached in the US with the defendants will not benefit to them," said Deminor.
According to the consultant: "This leads to the odd situation where Americans, who only constitute a minority of Parmalat investors, may be able to obtain recovery from the aforementioned defendants as passive members of the US class action, while the Europeans are excluded, unless they undertake legal action in Europe."
IPE reported yesterday that UBS and Credit Suisse have now settled all actions filed by companies of the Parmalat Group by agreeing to payments but without admitting liability of guilt.
UBS will pay a total of €185m for various claims in connection with the company's break-down. Credit Suisse confirmed it will pay €172.5m and keep the shares it received during the insolvency proceedings.
Parmalat settled its longstanding dispute with UK pension company Hermes, only last month, which in turn had sued the dairy manufacturer following the bankcruptcy. (See earlier IPE story: 'Parmalat ends Hermes suit following fresh settlement')
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