27-08-2010: Fortis case: Misleading information

New decision of the Dutch Autoriteit Financiële Markten

 

Deminor takes note of the recent decision of the Dutch Market Authority (Autoriteit Financiële Markten or AFM) that condemns Fortis (now Ageas) once more for violation of the Dutch law on financial supervision.

This decision of the AFM relates to the communication by Fortis on September 21, 2007 regarding the potential impact of its exposure to subprime investments on the profit and loss accounts. The same information was included in the prospectus issued by Fortis in the context of the rights issue of more than €13 billion in September and October 2007.

 

In its press release of today, the AFM states that, in the Fortis press release of September 21, 2007 as well as in the prospectus, an amount of €20 million is mentioned as the expected additional impact on the profit and loss accounts for FY 2007 if the subprime severity would deteriorate by a further 20%. Fortis does not give any indication on the nature and size of the exposure to subprime investments. In addition, the press release does not give any explanation on how Fortis has come to the calculation of that amount nor on what Fortis means by a 20% deterioration. By only mentioning a significantly low impact of €20 million, without providing explanations regarding the calculation of that figure, the AFM fears that investors have been misled. The AFM comes to the conclusion that the investors could not fully assess the risks arising from the indirect subprime investments of Fortis and their potential impact on the value of Fortis in the long term. As such, Fortis withheld important price sensitive information from (potential) investors.

 

Following the first decision of the AFM earlier this year which already imposed a fine on Fortis and the report by the Dutch experts that was published on June 16, 2010, this new decision of the AFM as well as the facts and the argumentation on which it is based once more confirm and reinforce Deminor's own analysis of Fortis' communication during the period preceding the dismantling of the group.

 

At the end of 2009, Deminor came to the conclusion that during this period of time Fortis' communication had been misleading on several material aspects, including its subprime exposure. Deminor therefore decided to launch a procedure against Fortis before the commercial court of Brussels.

 

The purpose of this procedure is to claim compensation for the losses suffered by investors due to the misleading information disclosed by Fortis during the period of time from the official announcement of the takeover on ABN Amro at the end of May 2007 until the dismantling of the group at the beginning of October 2008.

 

The group around Deminor includes more than 4,000 persons and consists of both private and institutional investors.

 

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Contact:

 

Charles Demoulin
Tel +32 2 674 71 10

2_Deminor Press Release - Fortis Case - 27 August 2010.pdf