The Court of Justice of the European Union (CJEU) has ruled that the possibility of claiming for Bankia’s IPO in 2011 is not limited only to retail investors but also to qualified investors. These are the big institutional investors who took the jump on the floor that year.
In a ruling released today, the European justice indicates that “in the case of a public offer of subscription of shares directed to both retail investors and qualified investors, the action for liability for the information contained in the prospectus does not only cover retail investors, but also qualified investors ”. In other words, community regulations protect all types of people affected by inaccuracies in the IPO prospectus.
The case confronts Bankia with the Mutual Assistance Insurance Union (UMAS), a qualified investor who attended the transaction with a purchase order for 160,000 shares at a price of 3.75 euros per share, which is equivalent to 600,000 euros. “As a result of a reformulation of Bankia’s annual accounts, the shares lost almost all of their value on the secondary market and their listing was suspended,” reads the sentence. This being the case, what the plaintiff is seeking is to declare nullity due to an error in the consent in the purchase of shares and that Bankia’s liability is decreed in a subsidiary manner due to lack of veracity in the issuance prospectus.
This assumption has reached the European justice system, two preliminary questions having been raised by the Spanish Supreme Court, when in doubt about who and under what conditions could claim in these cases. The Advocate General of the Court of Justice of the European Union (TEU) Jean Richard de la Tour It already ruled last February in favor of qualified investors being able to also go to court, a criterion that the community court has finally followed.
However, the right that protects UMAS and the rest of the large investors (in the IPO they also entered Villar Mir, Mutua Madrileña, Mapfre, Santander, Iberdrola…) is not unlimited. The European justice ruling also indicates that the Spanish judge may take into account extra knowledge that the investor had about Bankia beyond the official prospectus.
In this sense, the judgment emphasizes that the Community norm “does not oppose provisions of national law that, in the event of the exercise of liability action by an investor qualified by the information contained in the prospectus, allow the judge to take in consideration that said investor had or should have been aware of the economic situation of the issuer of the public share subscription offer based on your relationships with it and outside the brochure, or even oblige the judge to take such fact into consideration. Of course, “provided that the aforementioned provisions are not less favorable than those that govern similar actions provided for in national law or have the practical effect of making the exercise of liability action impossible or excessively difficult.”
With this ruling, the door opens for other companies and entities to claim Bankia for its jump to the market. In any case, the claim would already be taken over Caixabank after having absorbed the intervened entity. Last March the legal integration was forged and now the technological one is underway, which is still expected to last a few more months.
George is Digismak’s reported cum editor with 13 years of experience in Journalism