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What to expect now in the civil courts

| News | Litigation

The five-year investigation stage of the Bankia case has concluded, and we will now see how the Order delivered might affect the cases being processed through the civil courts

EXPANSIÓN | After five years of investigation, Criminal Investigation Court Number 4 assigned to the National High Court has delivered an Order to continue the proceedings through the fast-track procedure against BFA, Bankia and the directors that were present and involved in the approval of the separate and consolidated annual accounts for 2010 and 2011.

The Criminal Investigation Court has found that there are rational and sufficient indications of criminality against the investigated parties as the aforementioned financial statements did not provide a true and fair view of both entities and as the economic and financial information contained in the prospectus of Bankia dated 29 June 2011 for the initial public offering was false and that such facts fall under the crimes set forth and sanctioned by Articles 219 and 282 bis of the Criminal Code.

Despite what might be thought on a first reading of this lengthy ruling, the decisions contained therein will not have a decisive influence on the rulings of the hundreds of proceedings brought by minority shareholders which are currently being processed through the civil courts for error and/or wilful intent with regard to the consent provided in subscribing the shares of Bankia in the IPO.

This is because the ongoing criminal procedure will not deploy the effect of a preliminary ruling in the civil procedure in which the aforementioned actions are being exercised as ruled by the Supreme Court in Judgement Number 24/2016 issued by the Plenary Assembly of the Civil Chamber on 3 February 2016 in appeal number 1990/2015.

What is analysed in said procedures is an individual contract relating to the subscription of shares, as well as the impact on said contracts of the alleged falsification of the accounting of Bankia in order to make the subscription of the shares more appealing to the public, with any possible criminal liability of the authors resulting from said accounts being separate from the aforementioned legal-economic relationship.

Nevertheless, we cannot ignore the fact that the ruling supports, on a prudential and preliminary basis, the “well-known fact” of the falsification of the accounting of Bankia which has formed the basis of multiple judgements handed down by different legal bodies in proceedings brought against said entity that have ruled in favour of the small investors affected by the purchase of the shares.

In addition, the order may contribute towards favourable rulings in outstanding civil appeals brought by large shareholders or institutional investors if the arguments used by the investigating judge to dismiss the criminal proceedings with regard to those persons who held offices in the CNMV and in the Bank of Spain are taken into consideration.

As set out in the procedure continuation order, the regulatory and supervisory bodies adopted the necessary and legally established measures for the protection of investors, without it being possible to demand that they should have used their own resources to verify that the financial statements presented together with the prospectus that Bankia delivered for its IPO presented a true and fair view of the Bank.

Based on the arguments considered by the investigating judge in order to dismiss the criminal proceedings with regard to the officers in said entities, it does not seem consistent to require said verification to be conducted by large investors or institutional investors, who, as with the small investors, were given an incorrect representation of the bank’s solvency and, therefore, the possible return on the investment.

Lastly, we will have to wait and see whether this judicial ruling encourages the holders of securities acquired as a result of alleged false information who have been reluctant to go to court to take civil liability actions for the damages incurred as a result of the alleged inaccuracies contained in the prospectus of the initial public offering.


For any further information, please contact:

Vanesa Fernández Escudero

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