Summary of Case:
A securities class action has been filed against Fortis (Ticker: FORSY) ("Fortis" or the "Company") on behalf of all securities purchasers from January 28, 2008 through October 6, 2008 (Class Period) in the United States District Court for the Southern District of New York.
The complaint alleges that throughout the Class Period, Defendants issued materially false and misleading statements regarding the Company's business and financial results. As a result of the dissemination of the false and misleading statements set forth in the complaint, the market price of Fortis securities was artificially inflated during the Class Period. In ignorance of the false and misleading nature of the statements described above, and the deceptive and manipulative devices and contrivances employed by said defendants, plaintiff and the other members of the Class relied, to their detriment, on the integrity of the market price of Fortis securities. Had plaintiff and the other members of the Class known the truth, they would not have purchased said securities, or would not have purchased them at the inflated prices that were paid. Also during the class period, the Company and the individual defendants falsely portrayed the Company as relatively immune from the effects of the global credit crisis and stated that the Company's capital position remained strong and loan portfolio was solid. In actuality, the Company was practically insolvent at all relevant times and needed to sell assets at fire-sale prices and raise capital at extraordinarily high rates to remain viable. Moreover, the Company's balance sheet was impaired by billions of dollars of poorly performing assets the Company acquired when it purchased ABN AMRO in October 2007.
The magnitude of the Company's severe liquidity crisis first became apparent on September 29, 2008, when the governments of three separate countries (Netherlands, Belgium, and Luxembourg), agreed to bail-out the Company so long as it would sell its troubled stake in ABN AMRO. Published reports indicated that Fortis' sale of ABN AMRO would net considerably less than Fortis had paid for it just months ago. The deal would have given the three European nations a 49% stake in the Company. The emergency infusion was in the form of 11.2 billion EUR ($16.9 billion). This unprecedented move, however, was not enough to stem Fortis' continued decline. On Saturday, October 4, 2008, it was reported that the Dutch government took over Fortis' operations for 16.8 billion EUR ($23 billion) in a deal that came less than a week after the Netherlands, Belgium, and Luxembourg had agreed to invest 11.2 billion EUR in Fortis. News that the famed financial giant was in ruins and required nationalization further punished Fortis' already bruised stakeholders. On October 14, 2008, Fortis traded on the Brussels exchange at the lowest levels that it had ever seen since it was formed 18 years ago, after selling most of its operations to three governments and BNP Paribas SA. Fortis, which resumed trading after a six-day suspension, declined 78 percent to 1.22 euro, valuing the Company at 2.86 billion EUR ($3.91 billion).
