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Parmalat reaches settlement with shareholders in securities fraud claim

[JURIST] Italian dairy giant Parmalat SpA [corporate website; JURIST news archive] Friday reached a settlement [press release, PDF] with shareholders, agreeing to issue 10.5 million shares of stock, valued at almost 24 million euros, to satisfy a securities fraud class action filed against the company. The suit was filed by investors in the US District Court for the Southern District of New York following Parmalat's collapse in 2003 and alleged former company executives committed fraud which resulted in the diary giant's bankruptcy. The settlement is subject to approval by the court.

Parmalat filed for insolvency in December 2003 after discovering accounting discrepancies totaling nearly $5 billion in debt. In July 2007, an Italian judge indicted approximately 20 former Parmalat executives [JURIST report], including founder Calisto Tanzi and former CFO Fausto Tonna, on charges of fraudulent bankruptcy and criminal association for their role in the collapse. In June 2007, an Italian judge indicted four banks [JURIST report] for not revealing to the market that Parmalat was not financially healthy. Investors may have lost as much as $8 billion in the collapse. Bloomberg has more.

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Paper Chase is JURIST's real-time legal news service, powered by a team of 30 law student reporters and editors led by law professor Bernard Hibbitts at the University of Pittsburgh School of Law. As an educational service, Paper Chase is dedicated to presenting important legal news and materials rapidly, objectively and intelligibly in an accessible format.

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