Natixis Found Guilty of Downplaying 2007 Subprime Risks

(Bloomberg) -- Natixis SA was found guilty of misleading investors by downplaying its exposure to subprime risks more than a decade ago and fined the maximum potential amount -- 7.5 million euros ($9 million).

The French lender was also ordered to pay 3 euro a share in damages to groups of investors who say their savings were wiped out due to Natixis losses they were unable to anticipate.

“Natixis didn’t just make a mistake but deliberately misled the market,” Judge Nicolas Michon said on Thursday. “The fraud was willingly decided at the highest level at Natixis in order to protect the share price.”

The Paris case rested on a single statement, issued in November 2007, in which investigators say Natixis incorrectly specified that its subprime risks were limited.

The U.S. subprime crisis cascaded across the global economy, forcing the French bank to carry out a radical restructuring soon after its trading debut in 2006. Natixis cumulative net losses reached about 4.5 billion euros between 2008 and 2009, according to Bloomberg data.

The French bank has previously denied the allegations and said it provided information about its exposure in good faith. No current or former Natixis employees are targeted.

The company first sold shares to the public in December 2006 at 19.55 euros apiece, but two years later the stock dropped as low as 1.25 euros.

Parent company BPCE is currently offering 4 euros per share to take the company private.

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