Case Update: In a recent decision in the long-running Vivendi case, the Second Circuit has issued a landmark ruling adopting the so-called “price maintenance” theory of securities fraud. This theory holds that investors can recover for fraudulent statements that did not push up the price of a company’s securities, but maintained that price at an artificially inflated level.
Case Update: Following a four month trial, the jury rendered a verdict finding Vivendi guilty of securities fraud violations, and assessed damages at 50% of the amount requested. Defendants have moved to set aside the verdict, and to decertify the class to the extent that it includes purchases on foreign exchanges (citing the recent Supreme Court decision in Morrison v. National Bank of Australia). That motion has yet to be ruled upon.
Case History: Pomerantz LLP filed a class action against Vivendi Universal and then Chairman and CEO Jean-Marie Messier. According the complaint, Mr. Messier took Vivendi, a global media and communications company, on an acquisition binge that resulted in the Company amassing approximately $18 billion in debt. It is further alleged that Mr. Messier orchestrated a scheme to conceal the severity of Vivendi's liquidity problems stemming from the massive debt load incurred.
In fact, only days before his ouster by Vivendi's Board, Mr. Messier caused the Company to issue several press releases that falsely stated that Vivendi did not face an immediate and severe case shortage. If was only after Vivendi's board dislodged Mr. Messier that the Company's new management disclosed the severity of the crisis and that the Company would have to secure immediately both bridge and long-term financing or default on its largest credit obligation.