Legal News

Judge Tosses Vivendi Claims In Light Of High Court?s Morrison Decision

By Chad Bray

Vivendi SA has become the latest company to benefit from the U.S. Supreme Court’s Morrison decision last year, which restricted the ability of investors to pursue securities-fraud claims on foreign shares.

In a decision made public Tuesday, U.S. District Judge Holwell in Manhattan dismissed fraud claims by purchasers of Vivendi shares overseas, including American buyers. The decision followed a jury verdict last year that Vivendi was liable for 57 misstatements about its financial condition in 2001 and in 2002 and that it acted recklessly in connection with those statements.

The decision, which allowed claims by purcharers of American Depositary Receipts to proceed, narrowed the size of the potential class of shareholders. Vivendi said late Tuesday that the decision eliminated more than 80% of the potential damages.

Following last year’s verdict, lawyers for the shareholders said the potential damages could total more than $9 billion.

Vivendi described that decision as “substantial victory” for the company and vindicated its position at trial that shareholders who bought shares on foreign exchanges shouldn’t be able to bring claims.

Lawyers for the shareholders said they were disappointed in the applicationj of Morrison, but would “proceed vigorously to expedite procedures to allow class members to collect their damages.”

The U.S. ruling follows a decision last month by a Paris court finding former Vivendi Chief Executive Jean-Marie Messier and other former executives guilty of criminal charges related to the company’s near bankruptcy in 2002.

Full post as published by Law Blog - WSJ.com on February 23, 2011 (boomark / email).