Italy is not often thought of as a litigious country, especially with regard to securities class actions, but there has recently been a gradual increase in shareholder-related actions being offered in this country. Martingale Risk – a leading Rome-based law firm – has three different class actions that they are currently pursuing against defendants in Italy. Two of the cases have been ongoing for over a year, Saipem and Banca Monte dei Paschi di Siena (MPS) but the firm has assured potential claimants there is still time to join these actions. The third one, Bio-On S.p.A. is just now being opened for registrations. Below is a cursory overview of the actions in which investors can participate in Italy at this time.
Bio-On S.p.A. is a bio-plastic company based in Bologna, Italy. The company claimed to be the first company that could produce biopolymer products that are 100% biodegradable in soil and water. The company made a series of announcements involving ambitious projects of using these bioplastics in a variety of industries, including the medical, industrial, and health sectors. The company also conducted several press releases alluding to important partnerships and prospects for substantial expansion of its business. The company claimed to have over 200 patent and patent applications… when only two patents were identified to be filed by this company. Due to the company’s claims and ongoing announcements, the stock opened at €5 with an IPO on October 24, 2014. The price rose over 1,300% between 2014 to 2018 – to an all-time high price of €70 per share in 2018.
Pursuant to investigations carried out by Guardia di Finanza and CONSOB (Italian Financial Markets Authority), it was found that some of the statements and press releases were fabricated and they were in violation of Article 185 that deals with market manipulation. In October 2019, the Guardia di Finanza seized assets and began investigations against six members for false accounting and market manipulation. Borsa Italiana swiftly suspended trading of the Company’s shares upon learning of the Guardia di Finanza’s actions. The company was declared bankrupt in December 2019. Following the conclusion of the preliminary investigations, the Prosecutor’s Office of Bologna requested a trial against eight former members of Bio-On’s management and also against two of the company’s external auditors, Ernst and Young S.p.A. and PricewaterhouseCoopers S.p.A.
Martingale Risk proposes to file a collective lawsuit against Bio-On S.p.A.’s auditors – E&Y and PwC – on behalf of investors. The collective action will be self-funded by Martingale Risk and aims to obtain repayment of the damages incurred from investment losses.
Saipem S.p.A. is a leading Italian multinational company in the energy and infrastructure sectors. The company allegedly misrepresented critical financial information between 2015 and 2017. In 2018, CONNSOB sanctioned the company for account irregularities in their published 2016 and 2016 annual financial reports. CONSOB further sanctioned Saipem in 2019 over violations related to their January 2016 €3.5 billion capital increase. These violations included a failure to report the actual Q4 2015 estimates and the existence of uncertainties relating to implicit assumptions of the 2016-2019 Strategic Plan. Investors who participated in the January 2016 capital increase suffered a total loss of approximately 50%.
Martingale Risk originally pursued a case against Saipem in the summer of 2020 and ISS Securities Class Action Services circulated the information about this collective action at that same time. The law firm now believes the claims they represent are stronger due to recent developments surrounding the Saipem case. The company filed an appeal per each individual sanction and in 2021, the Court of Milan rejected the appeal of the sanction. The Regional Administrative Court rejected the appeal of the sanction thereby confirming non-compliance of the 2015 and 2016 financial statements. Also in 2021, the Public Prosecutor requested the indictment of two of Saipem’s top executives for the alleged crimes of Forgery of the Prospectus, Market Manipulation and False Corporate Communication.
Martingale Risk proposes to file a collective lawsuit against Saipem S.p.A.’s on behalf of investors on the basis of a claimant’s ability to seek compensation for unlawful acts (tort law). The collective action will be self-funded by Martingale Risk and aims to obtain repayment of the damages incurred from investment losses of Saipem equity shares from October 27, 2015 to February 12, 2016, including those investors who took part in the January, 2016 capital increase.
Banca Monte dei Paschi di Siena S.p.A. (MPS) is the oldest bank in the world and the fourth largest Italian commercial and retail bank. Over the last ten years, the company has carried out numerous complex-structured financial transactions aimed at modifying its economic and financial situation to the detriment of its investors. It has also allegedly disclosed false information to the market through financial statements and other public documents. Between 2013 and 2018, CONSOB sanctioned MPS ten different times for falsifying financial statements and for non-compliance of their 2014 financial statement and the June 2015 semi-annual financial report. CONSOB went so far as to suspend trading for MPS shares for almost a year – from 2016 to 2017 – and MPS lost more than 80% of its value after being readmitted to trading.
Martingale Risk originally pursued a case against MPS in the summer of 2020 and ISS Securities Class Action Services circulated the information about this collective action at that same time. At this time, the law firm believes the claims they represent are stronger due to recent developments surrounding the MPS case. In October 2020, the Court of Milan convicted the former MPS CEO and former chairman to six years in prison and the former president of the statutory auditors to three and a half years in prison. In May 2021, the Bank of Italy issued a sanction against MPS for €2.9 million in reference to the correctness of relations between intermediaries and clients dating back to 2009 and 2012.
Martingale Risk previously proposed to file a collective lawsuit against Banca Monte dei Paschi di Siena S.p.A. on behalf of investors. The law firm closed this action to new claimants for a period of time but has now opened registration again. They have also added an associated legal investigation and potential trial against MPS’s auditors, Ernst and Young S.p.A. The collective action will be self-funded by Martingale Risk and aims to obtain repayment of the damages suffered by investors in MPS equities or bonds between March 28, 2013 to March 1, 2018.
As of this period in time, Martingale Risk seems to be the primary entity pursuing recoveries against Italian-based defendant companies. ISS Securities Class Action Services will continue to assist claimants in registering their claims in these actions and will also continue to monitor opportunities with all vendors in Italy pursuing collective securities actions.
By Elisa Mendoza, Esq Vice President, ISS Securities Class Action Services