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In re Parmalat Securities Litigation

SRKW represents four of the lead plaintiffs — all major European institutional investors — in the Parmalat class action, filed in the United States District Court for the Southern District of New York. The case has been heavily litigated for over four years, resulting to date in partial settlements with two financial institutions (Banca Nazionale del Lavoro (BNL) and Credit Suisse) in the amount of $50 million, and with Parmalat SpA for shares in the newly reorganized Parmalat, valued at approximately $40 million. The settlement with BNL and Credit Suisse also required them to confirm their endorsement of and adherence to certain corporate governance principles designed to advance investor protection and to minimize the likelihood of future deceptive transactions. This is the first time in a securities fraud class action that shareholders were able to negotiate corporate governance measures from a defendant other than the issuer. (To review the press release and notice concerning the settlements, and to obtain a claim form, please go to the official website, www.ParmalatSettlement.com.)

The case was filed as a class action on behalf of those who purchased securities of Parmalat Finanziaria, S.p.A. (“Parmalat” or the “Company”) and its subsidiaries during the period from January 5, 1999 through December 18, 2003. It involves a fraud of breathtaking proportions in which Parmalat’s top management, with the direct and active support and participation of its bankers, lawyers, and auditors, concocted a series of transactions whose aim was to show the investing public that the Company was very profitable, when its operations were in fact failing, and that it had assets that did not exist. This web of deceit involved the creation of bogus bank accounts and special purpose entities to hide the Company’s massive debt, the use of forged financial records, and the manipulation of Parmalat’s balance sheet and income statement through fictitious investments and sham transactions. Following its sudden financial collapse in December 2003, Parmalat announced that its audited financial statements had been understated by nearly $10 billion and that shareholder equity had been overstated by $16.4 billion.

The case, commonly referred to as the Enron of Europe, is still proceeding more than four and a half years after Parmalat shocked the investing world by announcing that a bank account of one of its subsidiaries at Bank of America that supposedly held $4.9 billion did not actually exist. The defendants include entities related to the Deloitte and Grant Thornton accounting firms, Parmalat's outside counsel, and the investment banks Citigroup and Bank of America. To date, the parties have exchanged millions of pages of documents, and hundreds of hours of deposition testimony have been taken throughout the world, including Europe, South America, the Middle East, and Australia. Following merits discovery and extensive expert discovery, certain defendants filed motions for summary judgment. Those motions are currently before the Court.

The case is currently pending before the Honorable Lewis A. Kaplan in the United States District Court for the Southern District of New York, and is proceeding against the remaining defendants.