[JURIST] A jury in the US District Court for the Southern District of New York [official website] Friday found giant French entertainment corporation Vivendi SA [official website] liable [Dow Jones report] on 57 counts of violating US federal securities laws. The jury found that Vivendi SA had made material misstatements [Bloomberg report] regarding its financial health in 2001-2002 before a three-way merger with Seagram Co. and Canal Plus [corporate website, in French], and that investors who brought stock relying on those misstatements later lost money after its stock price fell. Jean-Marie Messier [BBC profile], Vivendi SA's former CEO, and Guillaume Hannezo, the former finance director, were found not liable by the same jury. Vivendi SA has said that it will appeal [press release] the verdict. The company said:
Vivendi believes that there are many grounds for appeal, including, but not limited to the Courts decision to include French shareholders in the class, its rulings on jurisdiction and the plaintiffs erroneous method of proving and calculating damages, as well as the numerous incorrect rulings made during the course of the trial. Furthermore, Vivendi believed, and continues to believe strongly, that it did nothing wrong and that this case raises significant legal issues for foreign corporations doing business in the United States that need to be definitively resolved.Arthur Abbey [firm profile], a plaintiff's attorney with Abbey, Spanier, Rodd and Abrams [official website] who litigated the case, said that Vivendi might ultimately have to pay out [WSJ report] between four and nine billion dollars in damages.
Messier, the former CEO, had earlier testified [LAT report; Bloomberg report] that the fall in stock price was not due to securities fraud but because of the then economic climate. In 2003, Vivendi paid a 50 million dollar fine to the Securities and Exchange Commission (SEC) [official website] to settle the complaint. Messier paid a one million dollar fine and agreed [NYT report] to give up his claim to a 26 million dollar severance payment. Vivendi had previously sued [JURIST report] Messier to recover the severance payment, claiming [NYT report] that board members had been coerced by Messier into signing off on the payment, but later withdrew its lawsuit as part of the settlement with the SEC