October 9, 2009

Vivendi On Trial

The big news this week was the commencement of the Vivendi securities class action trial in the S.D.N.Y. At issue in the case are alleged financial misstatements made by Vivendi from October 2000 to August 2002, when the company engaged in a period of significant growth through acquisitions. The American Litigation Daily has a report on the opening arguments.

The Vivendi case is unusual because it includes "foreign-cubed" claims by non-U.S. investors. The original subject matter jurisdiction decision in the case, which allowed the claims of the non-U.S. investors to move forward, found that there was sufficient U.S. conduct related to the fraud because Vivendi's CEO and CFO had "moved their operations to New York and spent at least half their time managing the company from the United States during a critical part of the class period." A long-running issue, however, has been exactly which non-U.S. investors should be included in the class. The court has certified a class that includes investors from France, England, and the Netherlands (but excludes German and Austrian investors).

The battle over whether French investors, who reportedly make up 60% of the certified class, should be included has been especially bitter. Earlier this year, the court declined to reconsider its decision to include French investors, while noting that another S.D.N.Y. court had come to the opposite conclusion in a different case. Meanwhile, foreign institutional investors excluded from the class have brought a series of individual suits against Vivendi in the U.S. courts. Securities Litigation Watch has a list of the institutional investors and the Telegraph has an article on the possibility of follow-on trials.

The trial reportedly will take several months (presuming that no settlement is reached in the interim). Stay tuned.

Posted by Lyle Roberts at October 9, 2009 9:36 PM | TrackBack
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