French media company Vivendi SA
The class-action lawsuit accused the company, former Chief Executive Jean-Marie Messier and former Chief Financial Officer Guillaume Hannezo of misleading investors about Vivendi's financial condition before a $46 billion, three-way merger with Seagram Co and Canal Plus.
Vivendi shares lost almost 90 percent of their value between October 2000 and August 2002, the period covered by the lawsuit.
Messier and Hannezo were found not liable by the Manhattan federal jury, which deliberated for about three weeks following a trial that began last October.
The scope of damages has yet to be determined. A Vivendi lawyer, Paul Saunders, said the company plans to appeal.
Testifying at the trial, Messier maintained that while some of his management decisions went sour, he did not conceal liquidity problems or overstate earnings, and did not seek to enrich himself at Vivendi's expense.
He said he never, never, never committed fraud, and called an allegation that he engineered investor losses a blatant lie.
In some respects, the case amounted to uncharted territory because there have only been a half-dozen similar class actions in U.S. federal courts since adoption of the Private Securities Litigation Reform Act in 1995 increased the evidence burden for plaintiffs.
The nine-member jury began deliberations on January 11. Three jurors had been excused during the trial.
Messier was forced out of Vivendi in 2002, after an acquisition spree that saddled the company with large amounts of debt. His successor Jean-Rene Fourtou sold billions of dollars of assets to help shore up Vivendi's balance sheet.
In 2007, presiding U.S. District Judge Richard Holwell ruled that investors in France, England and the Netherlands, but not Austria and Germany, could participate in the lawsuit.
According to several reports published January 13, a Paris judge blocked Vivendi's effort to prevent French investors from participating in the class-action lawsuit in New York, even though they could not pursue a similar case in France.
Messier now runs a merger advisory firm, Messier Partners, which has an office in New York.
The case is In re Vivendi Universal SA Securities Litigation, U.S. District Court, Southern District of New York, No. 02-05571.
(Reporting by Grant McCool. Editing by Robert MacMillan)