ABN AMRO, Goldman Sachs and World Online misled investors during the 2000 initial public offering (IPO) of the Dutch Internet provider, the Dutch Supreme Court ruled on Friday.
The listing of World Online in March 2000 was the biggest Dutch Internet IPO at the time, valuing the company at 12 billion euros ($18 billion). The stock plunged after it became known that World Online's chief executive had sold shares far below the IPO price before the stock was floated.
ABN AMRO and Goldman Sachs were jointly global coordinator, lead manager and bookrunner of the IPO.
The unlawful behavior of World Online, ABN AMRO
Investors lost a total of 2.3 billion euros and should be entitled to damages, shareholder group VEB said in statement.
The Supreme Court confirmed a lower court's verdict after an appeal from the three defendants and an added allegation from VEB that ABN AMRO had manipulated the share price.
The Supreme Court concluded that ABN AMRO had brought about a misleading opening price by buying shares.
Nina Brink, World Online's CEO at the time, sold stakes in the company for $6.04 per share almost three months ahead of the public offering, effectively offering a discount to the IPO price. World Online's shares tanked after news of the share sales broke after the listing.
The Supreme Court said there was unlawful behavior because the IPO's prospectus did not mention Brink had sold shares.
It also said that World Online gave false information in announcing alliances with other companies, which according to the Supreme Court were hardly of any substance.
Royal Bank of Scotland (RBS), which currently owns the ABN AMRO unit that co-managed the IPO, and Goldman Sachs declined to comment.
A spokeswoman for Italy's broadband provider Tiscali
(Reporting by Gilbert Kreijger; edited by Karen Foster)