DT misinformed investors in 2000 IPO, court rules

12 Dec 2014

Germany’s Federal Court of Justice (Bundesgerichtshof – BGH) has ruled that Deutsche Telekom (DT) misled potential investors buying shares in its public share offer in 2000, Reuters reports. The shareholders said that DT had been too optimistic about the valuation of the firm in its sales prospectus, thereby misleading potential investors. The long running case was brought to court by about 17,000 of the former monopoly’s shareholders who are claiming EUR80 million (USD99.5 million) in compensation for a fall in its share price following the sale in 2000. The BGH said in its ruling that DT had falsely suggested in the prospectus that it had sold shares in US operator Sprint in 1999 at a profit of EUR8.2 billion; in reality, the Bonn-based telco had transferred the shares to a wholly-owned subsidiary. According to the court, it failed to warn investors that it was still bearing the full risk of a potential drop in the valuation of Sprint. ‘In that regard, the prospectus is objectively wrong,’ the court said in a statement. The case has now been referred back to a regional court in Frankfurt, which will have to establish whether DT will have to compensate investors for the fall in the share price.

Germany, Deutsche Telekom (DT)