Hypo Real Estate Holding and its directors face a damages claim from shareholders for allegedly making misleading statements about how the German property lender was faring in the credit crisis.
Hypo Real Estate Holding and its directors face a damages claim from shareholders for allegedly making misleading statements about how the German property lender was faring in the credit crisis.
German-based law firm Rotter Rechtsanwalte has been hired by the disgruntled shareholders, who are angered by the 30%-plus plunge in the value of Hypo Real Estate’s shares on 15 January this year.
The dramatic drop in the share price was triggered by the shock announcement by the Munich-based bank that it would take a EUR 390 mln charge for losses on investments in collateralised debt obligations (CDO) in the fourth quarter of 2007.
Rotter Rechtsanwaelte said Hypo Real Estate had repeatedly told investors in press releases since August 2007 that it had not been affected by the credit crisis. The law firm said that investors who had purchased shares in Hypo Real Estate between 3 August 2007 and 14 January 2008 may be able to recover damages pursuant to the ban in the German Securities Trade Law on misleading statements by listed companies.
‘The news about the charge taken by Hypo Real Estate Holding is similar to what we saw last summer at IKB Industriebank, where we have been hired for filing lawsuits in more than a dozen cases, also by institutional investors,’ said Bernd Jochem, partner at Rotter Rechtsanwaelte.
Hypo Real Estate has not commented on the pending legal action, but the bank said in a short statement that the supervisory board has terminated the employment contracts of two current and two former board members.
One of the four is former CEO Georg Funke who stepped down in October shortly after the bank secured a EUR 50 bn lifeline from a public-private consortium to survive a credit squeeze. Initially the parties had agreed on a EUR 35 bn bailout but this was found not to be sufficient.
The German prosecution service has launched an investigation into suspected violation of disclosure rules and breach of trust. On 15 October the supervisory board of Hypo Real Estate initiated an independent enquiry into whether there was any breach of duty by Funke and another former board member, Bo Heide-Ottosen. The supervisory board has also terminated Heide-Ottosen’s contract.
The two servicing board members who were dismissed are Markus Fell and Frank Lamby.
Click on the link below to read 'Hypo to cut 1,000 jobs, mulls asset sales in drastic restructuring'
