(CN) — The Second Circuit upheld a judgment Tuesday against a French media company accused of lying to investors about its financial status and artificially inflating its stock prices.
Vivendi SA, the former French utility turned global media company, appealed from a 2010 jury verdict finding it liable for violating U.S. security laws for hiding debt from a $77 billion acquisition spree from investors.
The underlying class-action lawsuit was filed against Vivendi in 2002. It alleged that the company made “persistently optimistic representations” from October 2000 to August 2002, and those representations constituted securities fraud.
During those two years, “Vivendi repeatedly expressed its aggressive growth prospects and its secure financial footing,” according to court records.
Vivendi’s stock plummeted in 2002 after it spent much of its capital acquiring a diverse array of media and communication businesses in the United States. It was originally a French water utility.
In 2010, a jury found Vivendi liable for violating federal securities laws. The Second Circuit affirmed the decision Tuesday.
Judge Debra Ann Livingston, writing for the three-judge panel, found that statements Vivendi made to investors could be construed as false and misleading. The New York City-based appeals court rejected Vivendi’s arguments that the statements were “non-actionable opinion, puffery, or forward-looking statements.”
“We conclude that there was sufficient evidence for the jury to find the fifty-six relevant statements materially false or misleading in regards to Vivendi’s true liquidity risk,” Livingston wrote. “Where a company seeks fraudulently to hide a particularly large problem with multiple contributing factors, it is quite probable that the company will have to lie about a number of related topics in order successfully to conceal the larger issue.
The judge added, “A reasonable investor could find each of the alleged misstatements false or misleading in context with respect to Vivendi’s liquidity risk.”
Attempts to reach Vivendi for comment Tuesday were unsuccessful, but the company said in a statement that it “is analyzing its options, both in seeking further review before the court of appeals and in filing a petition for review with the Supreme Court of the United States.”
In 2014, a $50 million judgment was entered for investors. The jury wasn’t asked to assess damages against Vivendi in the 2010 trial.
In a related ruling filed Tuesday, the Second Circuit also upheld the lower court’s finding that certain “value” investors “would have made the choice to buy the same securities” had they known of Vivendi’s liquidity problems.
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