US/EUROPE - A group of investors led by the Retirement System for the General Employees of the City of Miami Beach have won a class action trial against Vivendi and will be entitled to recover an estimated US$9.3bn.
The lawsuit alleged the defendants concealed the true liquidity risk during the class period and investors suffered losses resulting from a liquidity crisis in mid-2002.
The jury found Vivendi acted recklessly in 57 instances where it was alleged to have made materially false and misleading statements to the investing public, according to a statement by law firm Labaton Sucharow.
Pension administrator for the Miami Beach retirement fund Rick Rivera said: "This case shows that pension funds can play a positive role in making sure the stock market is free of fraud and is fair for all investors."
The case was filed in 2002 and has been on trial in federal court in New York since October 5, 2009.
Gerard Morel, a retiree from France, who testified at the trial, said: "I am particularly proud that French shareholders were included in the class. It is a victory for investors everywhere."
However, the class included only persons from France, the US, the UK and the Netherlands who purchased Vivendi securities during the period of October 30, 2000 to August 14, 2002.
Investors from other countries were excluded early on and filed over 100 individual separate suits.
Labaton Sucharow chairman Lawrence Sucharow - who represents several investors in those individual claims - explained Vivendi asked the court to exclude the investors from countries that would not accept a US class action judgement.
Sucharow said: "These would exclude, for example, the countries that in case of a judgement by a US court unfavourable to investors, would allow them to (then) sue in those countries."
Upon motion by Vivendi, judge Richard Holwell of the US Court for the Southern District of New York restricted the scope of the class only to shareholders who resided in the US, France, the UK and the Netherlands.
Sucharow warned: "The fact the judge decided to exclude investors from certain countries on the basis of acceptance of US judgements might make it harder in the future for non-US investors to participate in US class action."
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