201412.17
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“Rato could face six years in prison for lying to the Bankia shareholders”

Today we woke up to the following headline in the newspaper “El Mundo”:
“Rato could face six years in prison for lying to the Bankia shareholders”

There can no longer be any doubt that Bankia will be facing yet another battle. Indeed, as the saying goes, “one thing leads to another”.

On 28th June, 2011, the General Meeting of Shareholders and the Board of Management of Bankia passed the necessary resolutions to set in motion the listing of BANKIA S.A. through a Public Offer for Subscription of shares and the application for admission to trading.

To a large extent, the success of the listing on the Stock Exchange was due, not only to the vigorous advertising campaign launched by BANKIA -encouraging retail clients to become Bankers-, but also by a series of policies facilitating the subscription among its own clients.

Consequently, on 20th July 2011 BANKIA S.A. was listed on the Stock Exchange, issuing 824,572,253 new shares with a face value of 2.00 euro and an issue premium of 1.75 euro per share, resulting in an increase of the company’s capital by a total amount of 1,649 million euro, although the total obtained at issue price -3.75 euro per share- amounted to 3,091 million, adding a premium of 1,442 million euros.

On the same day, the then president of the entity, Mr Rodrigo Rato, explained in his speech the pillars supporting this listing of BANKIA S.A.

  • The completion in record time of such a highly      complex and painstaking process as a public offer for subscription.
  • The strength of the project in a climate of      uncertainty.
  • A strategic moment for BANKIA S.A. and the      Spanish economy.
  • All difficulties were overcome and all phases      completed, converting the project into a reality on the market and a great      company being listed on the Spanish Stock Exchange.
  • A success evidenced by the 11 million customers      who continue to place their trust in the entity.
  • The enthusiasm of a great team of professionals      who have worked with an extraordinary commitment, firmly believing in the      excellence of the project and convinced that its listing on the Stock      Exchange was essential for the future of the company.
  • Why this listing? Apart from the requirements of      the Bank of Spain and the Royal Decree of February, the listing is a      strategic decision, as it will strengthen the entity and consolidate its      leading role in the universal Spanish banking sector.

The truth as it has now come to light is that we can draw the conclusion that the issuance of these shares was carried out not only making false promises that were published concerning the profitability, but mainly on the basis of the alleged robustness and financial rehabilitation of the entity’s accounts. The fraudulent nature of the placement of the Bankia shares has become so evident that it appears to me that the viability of the applications for a declaration of invalidity of the purchase of shares or for recovery of losses incurred is even more apparent than in the case of the issue of preferred shares. In my view, the former are likely to succeed, not only in favour of those who participated in the Public Offer for Subscription, but even of those who bought shares on the Stock Exchange during the following days, although in the latter case they have less arguments to support their claim.

In these cases we can claim the following from BANKIA:

A)    The nullity of the purchase of the shares. This would imply that you return the shares you currently hold to Bankia, with the latter refunding the money invested in the purchase increased by the legal interest (currently 4% per annum) from the date of purchase until the actual reimbursement of this money (as of the date of the affirmative judgement the interest is increased by two percentage points to 6%).

B)    Recovery of losses incurred: the difference between the price of purchase of the shares and their selling price. In this case legal interests only accrue as of the date of the first claim against Bankia (equally increased by two percentage points from the date of the affirmative judgement). At the moment a large number of affirmative judgements have been passed ordering Bankia to refund the money.

By way of example we can highlight the following judgement passed on 21st November 2013 by the Court of First Instance number 10 of Oviedo

Please do not hesitate to ask us for an appointment to examine your case without cost.

Fernando M. Sánchez

Solicitor

fernandomsanchez@criadokraus.com

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