This is a securities class action lawsuit against Fortis.
The class action lawsuit alleges that Fortis falsely portrayed Fortis as relatively immune from the effects of the global credit crisis and stated that Fortis' capital position remained strong and loan portfolio was solid. In actuality, Fortis 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, Fortis' balance sheet was impaired by billions of dollars of poorly performing assets Fortis acquired when it purchased ABN AMRO in October 2007.
The magnitude of Fortis' 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 Fortis so long as it would sell its troubled stake in ABN AMRO. Published reports indicated that Fortis's 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 Fortis. The emergency infusion was in the form of 11.2 billion euros ($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 euros ($23 billion) in a deal that came less than a week after the Netherlands, Belgium, and Luxembourg had agreed to invest 11.2 billion euros 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 Fortis at 2.86 billion euros ($3.91 billion).
Name (Stock Symbol)
Fortis SA, through its subsidiaries, is a EUropean financial institution that offers the full range of banking and insurance services. Its Dutch banking and insurance activities have been acquired by the Dutch State. The other banking activities have been acquired by the Belgian State and will ultimately – together with the Belgian insurance activities – be acquired by BNP Paribas.
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