[JURIST] A jury in the US District Court for the Southern District of New York Friday found giant French entertainment corporation Vivendi SA liable on 57 counts of violating US federal securities laws. The jury found that Vivendi SA had made material misstatements regarding its financial health in 2001-2002 before a three-way merger with Seagram Co. and Canal Plus, and that investors who brought stock relying on those misstatements later lost money after its stock price fell. Jean-Marie Messier, 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 the verdict. The company said:Vivendi believes that there are many grounds for appeal, including, but not limited to the Court’s 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, a plaintiff’s attorney with Abbey, Spanier, Rodd and Abrams who litigated the case, said that Vivendi might ultimately have to pay out between four and nine billion dollars in damages.
Messier, the former CEO, had earlier testified 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) to settle the complaint. Messier paid a one million dollar fine and agreed to give up his claim to a 26 million dollar severance payment. Vivendi had previously sued Messier to recover the severance payment, claiming 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