With Vigour and Zeal

Today Parmalat SpA (Milan: PLT) announced it has settled the securities class action pending against it (SDNY). It will issue 10.5 million shares - ‘new’ according to AP, ‘existing’ according to WSJ - worth approximately €24 million to the class. (press release, Forbes and see the FT, WV&Z archives)

The Guardian quotes Lead Counsel Grant & Eisenhofer PA’s Stuart M. Grant:

“We are very pleased with the settlement reached with the company, bringing total investor recovery obtained so far in the Parmalat case to approximately $90 million. […] We will also continue to press claims against other defendants whom we allege defrauded investors over a period of years prior to Parmalat’s ultimate collapse in 2003.”

So it’s not over yet for the class, nor for Parmalat that still is involved in other legal procedures of its own.

The laws have changed in Italy to allow for class actions (azione collettiva risarcitoria) from 30 June this year. Since it’s been in the works for years, a lot has been written about it already. WV&Z offers a few resources to get up to speed, starting with material produced by practitioners:

• PwC (study paragraph, p.65 of 77)
• Lovells LLP (bulletin article, p.7 of 20)
• DLA Piper LLP (The Lawyer article, p.29)
• Clifford Chance LLP (client briefing)

Prof Elisabetta Silvestri of the University of Pavia has written an extensive guide (report, supplement) on the legislation and its history (with thanks to GCAX). Also see this 2005 paper by two Italian professors on Parmalat (about which see the next post too). From the abstract:

[After a description of Parmalat’s frauds and governance, w]e subsequently analyse the causes of under-enforcement and the reasons why Parmalat generated litigation in the US rather than Italy. Drawing from economic analysis, we explain the role of private enforcement and consider the benefits of class actions. In this respect, we emphasize the importance of discovery and pleading rules. We also find that the interplay between public and private enforcement is missing in Italy and argue, by way of conclusion, that US securities regulation was transplanted into Continental Europe without sufficient modernisation as to civil procedure in the area of mass claims and complex litigation.

But is a change in the law enough? What about the judges presiding over these cases? These two papers examine just that:

• Do Corporate Law Judges Matter? Some Evidence From Milan (link)
• Off the Books, but on the Record: Evidence from Italy on the Relevance of Judges to the Quality of Corporate Law (link)