Telekom: Cheated T-shareholders get their money back

Frankfurt/Main. After the half-hour hearing before the Frankfurt Higher Regional Court (OLG), the plaintiffs’ lawyers spoke of how happy they were. And they spoke of a good day for investors and a good day for investor protection. Shortly before, the presiding judge Bernhard Seyderhelm had announced that the court had accepted a settlement offer from Deutsche Telekom. This means that the largest investor litigation in local legal history to date is about to be concluded soon – after 20 years. Plaintiffs are offered that they will be reimbursed for a large part of the damage caused by the purchase of T-shares.

Telekom wants to make an offer to each of the around 16,000 investors by the middle of the year. Seyderhelm emphasized: “The Senate advises all parties involved to conclude this settlement.” The lawyers and the shareholder protection organization DSW agreed with this recommendation. The first transfers should be made this year. This was preceded by months of negotiations between the plaintiffs and the lawyers at Telekom.

The result: The Bonn-based group wants to reimburse investors who bought shares in the state-owned group between May and December 2000 for the cost of buying the paper minus dividends paid and the litigation fees plus interest. Peter Gundermann from the law firm Tilp emphasized: “It is better to fight for a long time with a good result than to lose quickly.” His law firm was something like the lead in the process.

Experts estimate that the Magenta Group will now have to pay a low three-digit million amount. Telekom chief legal officer Claudia Junker said it was time to make this “very fair offer”. Otherwise the process would have continued for ten years.

Even with the IPO in a downward spiral

Indeed, the process has monstrous features. Also because of the complexity of the matter. At the opening of the main hearing, Gundermann once drove a man-high mountain of files into the negotiation room with a hand truck. That was in April 2008 and the so-called third IPO of Telekom, which it was about, almost eight years of history.

The papers were offered to investors for 66.50 euros each. At that time, the T-share had long since reached its high of around 103 euros. It was the time when the first dot-com bubble burst. The share quickly lost massively in value. It slips through to a good seven euros – yesterday the paper was quoted at just under 17 euros.

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Court clears way for Telekom settlement in investor dispute

The Dax group could face expenses in the three-digit million range. © Reuters

The outrage of the T-shareholders about the crash of the paper was great. The federal government had repeatedly suggested to them that this was a paper “for widows and orphans”, as action activists often put it. So an absolutely safe investment. The dividend stock then turned out to be an “overvalued gamer paper”. Masses of investors filed lawsuits trying to enforce damages. In order to cope with the flood, the Bundestag had to make a new law. With the monstrous name: Investor Model Law, in short: Kapmug.

On many days of the negotiations, the lawyers tried to prove to Telekom that incomplete and incorrect information was given in the sales prospectus for the third IPO – although it was an open secret from the start that very few investors looked into the more than 200-page brochure a little more closely had.

Questionable deals with holdings

The lawyers, however, were initially committed to the takeover of the US mobile operator Voicestream, which was carried out shortly after the IPO, but was not mentioned in the prospectus. Finally, the stake in Sprint, another US wireless operator, came into focus. In 2014, the German Federal Supreme Court ruled that even investors with knowledge of the balance sheet could not have inferred from the prospectus that, despite the transfer of Sprint shares to a subsidiary, the risk of price losses for Sprint shares remained with the group.

That was the turning point in the telecom process. After that, the prosecutors had the upper hand. Yesterday the lawyers praised the Kapmug again, which has since been rebuilt and is now being used in proceedings against Volkswagen in connection with the emissions scandal. DSW representatives have criticized the paragraph work, however, because it does not shorten the process, but lengthen it.