A US jury ruled on Friday that French media giant Vivendi recklessly misled investors about the company’s finances, opening the door to a potential multibillion dollar payout to shareholders.
But former Vivendi chairman and chief executive Jean-Marie Messier was cleared along with his chief financial officer Guillaume Hannezo by the jury, which had been deliberating over two weeks in the shareholder lawsuit.
Vivendi and Messier had been accused of making false statements about company finances between 2000 and 2002, before a collapse of the group’s share price in the lawsuit charging “recklessly misleading communication.”
The class-action lawsuit brought in US federal court in 2002 had sought as much as US$11.5 billion to compensate shareholders.
Lead plaintiff attorney Arthur Abbey said the jury decision could result in a payout of some US$4 billion after shareholder claims are examined.
Other attorneys said the total could be as much as US$9.3 billion.
“This verdict shows that deserving investors can get just compensation through class actions, even against the strongest opposition. Very few of these cases go all the way to trial, and we are gratified at the outcome,” a joint statement from plaintiff attorneys said.
Vivendi said in a statement it “strongly disagrees with the findings” and would appeal.
The company said the amount of damages that Vivendi may be required to pay “remains uncertain and will be known at a later and as yet undetermined stage.”
The verdict calculates damages on a per-share and per-day basis and “it is impossible to know at this time the total number of shares traded by class members, the dates of the relevant sales and the number of class members who will submit a valid claim after receiving notice of the decision,” Vivendi said.
Maxime Delespaul, a lawyer for French plaintiffs, called the decision “a wonderful victory” for shareholders and predicted the ruling would hold up on appeal.
Messier, a high-flying magnate forced out as CEO and chairman of Vivendi in July 2002 as the group was teetering with 35 billion euros (US$47 billion) in debt, was not present when the verdict was read.
The case stems from a huge boom and bust in Vivendi, which went on a massive acquisition spree under Messier’s leadership as it transformed itself from a water utility to a global media giant.
The company changed its name to Vivendi Universal after a complex deal that allowed it to acquire US-based Universal Studios and other properties to refocus the group.
In the lawsuit, the plaintiffs said Vivendi and Messier failed to disclose risks associated with the growth spree that led to big losses and writedowns.
Company attorneys argued that Vivendi, like other firms, saw its share price hammered during the collapse of the tech sector and the economic fallout following the terror attacks of Sept. 11, 2001.
The lead plaintiffs were the retirement system for Miami Beach municipal employees and several individuals.
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