European Judiciaries Prefer That Large Investors Can Ask Bankia For An Ipo.

2021-02-11   |   by CusiGO

The EU’s attorney general proposed on Thursday that large investors in Bankia’s initial public offering in 2011 could also be held responsible for the financial institution’s failure to reflect its accounting reality in its prospectus. However, the counsel’s opinion is not binding, but is generally supported by European justice, who believes that Spanish justice takes into account investors’ “knowledge of the actual situation” rather than the inaccurate or incomplete provisions in the prospectus.

The supreme court applied to European judges for umas. The agency subscribed 160000 shares in Bankia’s 2011 public offering for a total amount of 600000 euros. After the annual accounts of Bankia were re compiled, the shares lost almost all of their market value. Umas then filed a lawsuit against the bank, demanding the withdrawal of the purchase of shares and declaring the financial institutions’ responsibility for the untrue prospectus.

Umas won the first trial and successfully cancelled the share acquisition, but the provincial court rejected the invalid judgment, although it recognized that the bank was responsible. The case was brought to the Supreme Court, which in previous retail lawsuits found “serious misrepresentation” in prospectuses and quashed the purchases. However, the court doubts whether it should take the same action against QFII, especially if the offers do not require prospectuses, if they are for large groups.

Lawyer Jean Richard’s conclusion is positive: “qualified investors can take liability action against the prospectus, although when the offer is only for these investors, it is not necessary to publish the document. According to the lawyer, “the literal and systematic interpretation of the order leads to the view that the prospectus is only set up to protect unqualified investors”. Therefore, the Committee concluded that if the document contained a “misrepresentation”, it should be able to institute a “civil liability action” based on its “misrepresentation” regardless of the status of the investor considered to have been injured “.

However, the attorney general believes that, except for the inaccurate or incomplete provisions in the prospectus, the order does not prevent the judicial justice from considering “QFII’s understanding of the actual situation of the issuer”. In other words, lawyers do not stipulate the conditions for exercising the liability litigation, because countries must have “discretion”, but they must always abide by the principle of “effectiveness and equality”.

The civil chamber raised two issues with the European Court of justice. The first question: “if the underwriting of public offering is aimed at retail investors and qualified investors, and the prospectus is aimed at retail investors, is the responsibility action of the prospectus aimed at these two types of investors or only at retail investors? “,

If the answer is that big investors are also protected, the court also raised another question: “in addition to the prospectus, they can also assess their understanding of the financial situation of OPS issuers, Based on the legal or commercial relationship with the issuer (as part of its shareholders, management, etc.)? (a)