Shareholders who lost their shirts following the collapse of EM.TV five years ago could get their money back, following a ruling July 19 by Germany's supreme court.
COLOGNE, Germany (The Hollywood Reporter) -- Shareholders who lost their shirts following the collapse of EM.TV five years ago could get their money back, following a ruling July 19 by Germany's supreme court.
The court ruled that shareholders who bought into EM.TV in 2000, before the company's stock took a nosedive, might sue for compensation.
The decision overturned a prior lower court ruling that had denied shareholders any recompense.
The case centered on the actions of former EM.TV chief executive Thomas Haffa and his brother, chief financial officer Florian Haffa.
In 2000, the Haffas published shareholder ad-hoc reports that said EM.TV would meet its profit and revenue targets. In fact, EM.TV was on the brink of bankruptcy and crippled by a massive debt load. When the truth came out, EM.TV stock collapsed and shareholders lost almost all of their investment.
Under the ruling, shareholders who bought into EM.TV beginning in March 2000 might be eligible for compensation. If a shareholder can prove he purchased EM.TV stock as a result of the false ad-hoc claims, EM.TV must repay the full initial purchase value of those shares.
Shareholders who sold off EM.TV stock following the collapse might apply for compensation for the difference between their purchase price and the devalued share price.
EM.TV stock fell 1.8% to €5.89 ($7.06) on July 19 following the ruling. But EM.TV downplayed the news, saying it did not expect a flood of compensation claims.
"The (Supreme Court) will have to decide in each individual case, whether compensation is appropriate," EM.TV said in a statement. "In particular, the causality between the (false) ad-hoc reports and the investors' decision (to purchase EM.TV shares) must be proven by the claimant."
According to press reports, there are 42 small shareholders in total who potentially qualify for compensation under the ruling.