|  | | 2008 News and Press Releases | | |
HEADLINE NEWS:
A Historic Deutsche Telekom Case, In a lawsuit that may lead to similar class actions, 17,000 shareholders seek compensation from the German telco for it share-price slump
Nils-Viktor Sorge
BusinessWeek. April 7, 2008
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EXCERPT: It only happens once every few decades that the judges of Frankfurt's senior district court venture out of their courthouse to conduct a trial. They had no choice with the class-action case brought by 17,000 frustrated Deutsche Telekom shareholders which started on Monday. Lack of space forced the court to rent a civic hall that provides room for 600 people. Security guards have been hired to prevent any trouble and to ensure that "the court doesn't lose control over proceedings," as a court spokesman put it. Seventeen days of hearings have been set so far. The shareholders are suing the company because they claim they were duped into buying shares in the former state telecoms monopoly by misleading or missing prospectus information ahead of a share issue in 2000. Deutsche Telekom Chief Financial Officer Karl-Gerhard Eick and former chief executives Kai-Uwe Ricke and Ron Sommer are due to appear as witnesses to the events surrounding the company's third capital raising in 2000, when 200 million shares were sold. The claimants, many of whom put their life savings into what they saw as a safe investment, are suing Deutsche Telekom for up to €80 million ($125 million). The issue price was €66.50 per share, around six times what the shares are worth now. … Depending on its outcome, the case could encourage investors in other companies to join forces and mount similar class-action suits. The case is the first test of a new form of legal process introduced in Germany to deal with mass claims in cases concerning capital markets. "The Telekom case is the test for the law," said Jürgen Kurz of the German Society for Protection of Share Ownership. Claimants in class-action type suits will have less impact on the outcome of proceedings but it will be cheaper for them to take legal action in this way in future. And that could mean that German CEOs will in future be facing more court cases in civic halls and congress centers like the one in Frankfurt. |
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