Banking & Capital Markets

BofA Dismissed from One Parmalat Suit

The ruling does not affect a lawsuit filed against the bank by Enrico Bondi, the administrator appointed by the Italian government to run Parmalat,...
Stephen TaubJuly 14, 2005

Bank of America Corp. was dismissed from an investor class-action lawsuit stemming from an equity investment in a Parmalat Finanziaria SpA subsidiary in Brazil and loans to other Parmalat subsidiaries, according to press reports.

The ruling by Judge Lewis Kaplan of U.S. District Court in Manhattan does not affect a lawsuit filed against the bank by Enrico Bondi, the administrator appointed by the Italian government to run Parmalat, seeking up to $10 billion in damages. According to The Wall Street Journal, on Monday the judge will conduct a separate hearing before ruling on that claim.

The paper said that Bank of America issued a statement on Thursday saying it was “gratified” by Judge Kaplan’s decision, adding, “In all of our dealings with Parmalat, Bank of America believed that it was dealing with a strong, honest and profitable company and we had no knowledge of the fraud perpetrated by Parmalat and its senior management.”

In the same ruling, reported the Associated Press, the judge found that Citigroup’s securitization of certain Parmalat invoices and factoring of those invoices by Banca Nazionale del Lavoro to be deceptive devices or contrivances if the invoices were actually worthless.

“The defendants’ argument that they were at most aiders and abettors of a program pursuant to which Parmalat made misrepresentations on its financial statements misses the mark,” the judge said in his order, according to the AP. “The transactions in which the defendants engaged were by nature deceptive. They depended on a fiction, namely that the invoices had value. It is impossible to separate the deceptive nature of the transactions from the deception actually practiced upon Parmalat’s investors.”

Citigroup responded in a statement that it was pleased the judge dismissed a number of claims and that it is “confident the remaining claims will be resolved in our favor,” according to the report.

In addition, Judge Kaplan ruled that purchasers of Parmalat securities who pursue claims in the United States against Banca Nazionale del Lavoro and Credit Suisse First Boston Corp., which helped Parmalat arrange financing, only if they U.S. citizens, according to the AP.

4 Powerful Communication Strategies for Your Next Board Meeting