On 24 September 2015, the Brussels Court of Appeal (Hof van beroep / Cour d'appel; the "Court") reduced the fines that the Financial Services and Markets Authority (Autoriteit voor financiële diensten en markten / Autorité des services et marchés financiers; the "FSMA") had imposed on Ageas, the successor in title of Fortis Bank, and on two of its former top executives, Jean-Paul Votron and Gilbert Mittler.

The Court had to review three appeals lodged against the decision of the FSMA sanctions commission (sanctiecommissie / commission des sanctions; the "Sanctions Commission") of 17 June 2013 (the "Decision"). Following a procedure of more than three years, the Sanctions Commission had imposed fines on Ageas (EUR 500,000) and Messrs. Votron and Mittler (EUR 400,000 each) for violation of specific provisions of the Law of 2 August 2002 on the supervision of the financial sector and on financial services (Wet betreffende het toezicht op de financiële sector en de financiële diensten / Loi relative à la surveillance du secteur financier et aux services financiers; the "Law").

In particular, the Sanctions Commission had found that Ageas and Messrs. Votron and Mittler had each infringed Article 21, §1st, 4° of the Law which provides that "[i]t is prohibited for any person [...] to disseminate information or rumours through the media or the Internet or by any other means, which give, or are likely to give, false or misleading signals as to financial instruments, where the person in question knew, or ought to have known, that the information was false or misleading [...]". Over the period May-June 2008, four public communications were specifically considered to be in breach of the Law. These included the statements made during the Fortis investor days of 22 and 23 May 2008 by Messrs. Votron and Mittler, respectively (the "First Communication" and "Second Communication") and during the financial breakfast in Utrecht on 5 June 2008 by Mr. Votron (the "Third Communication"). At issue were also assertions by Herman Verwilst at the Goldman Sachs conference in Berlin on 12 June 2008 (the "Fourth Communication").

According to the Sanctions Commission, each of these four communications contained misleading and/or false information concerning the financial situation of Fortis/Ageas following the takeover bid for the Dutch bank ABN Amro. In particular, key information was hidden from and wrongly delivered to the public with respect to the solvency of Ageas/Fortis and the divestment of certain assets. Further, the Sanctions Commission also found that Messrs. Votron and Mittler, as well as Ageas/Fortis should have disclosed, as per Article 10 of the Law, in these four communications, inside information that had come to their attention, including significant changes to information that had already been disclosed.

The Court examined each of the four communications for the purpose of determining whether the Law had been breached.

  • With respect to the First Communication, the Court upheld the reasoning of the Sanctions Commission and considered that Mr. Votron had provided false information with respect to the divestment process of certain assets of ABN Amro. Contrary to his assertions that discussions were pending with potential buyers and that binding offers had been received, the Court stated that he knew that the process was not going according to plan and that the only binding offer that Ageas/Fortis had received – namely from Deutsche Bank – was made on unfavourable terms for Ageas/Fortis. However, unlike the Sanctions Commission, his statement that the timing was in line with what had been requested by the European Commission was considered not to be misleading.
  • The Court also found that Mr. Mittler had breached the Law at the investor day by stating, in the Second Communication, that Ageas/Fortis was on track to meet its look-through solvency targets at/by the end of 2009 and that its solvency position remained strong thanks to the successful execution of its initial capital management plan. In fact, the Court concluded, just like the Sanctions Commission, that Mr. Mittler had delivered false information in relation to the solvency of Ageas/Fortis and had attempted to hide the increasing deficit by delivering over-confident forecasts to calm down the market, while he knew, or ought to have known, that the situation did not justify optimistic and reassuring statements.
  • The Third Communication was also found by the Court to be in breach of the Law, again confirming the Sanctions Commission's findings. Indeed, Mr. Votron had declared that the solvability was strong and in line with the capital management plan, while Mr. Mittler had informed him, ahead of the financial breakfast, that additional measures were going to be necessary to remedy the deteriorated solvency situation. However, unlike the Sanctions Commission, the Court found that neither Mr. Votron nor Mr. Mittler had a legal obligation to mention the existence of such additional measures, which pertained to Ageas/Fortis itself, in the framework of their obligations to disclose privileged information to the public.
  • In relation to the Fourth Communication, the Court also found a violation of the Law in Mr. Verwilst's statement that the plan in place to rebuild the solvency of Ageas/Fortis would cause Ageas/Fortis to be back on target by the end of 2009. This statement proved once again too optimistic and misleading for investors. Indeed, at that time Mr. Verwilst knew that the results of the measures already undertaken by Ageas/Fortis with respect to its solvency were disappointing and that new measures were going to be necessary, such as a capital increase and the modification of Ageas/Fortis' dividend policy. The Court did not examine the penalties imposed on Mr. Verwilst, as this formed part of a separate procedure before another chamber of the Brussels Court of Appeal. That Court held that the mere fact that violations of specific provisions of the Law had been found to exist was sufficient and that an additional financial penalty such as a fine was not necessary.

With respect to Ageas/Fortis, the Court did not rule on all the breaches upheld by the Sanctions Commission pursuant to the non bis in idem principle. Under this principle, nobody should be tried for acts for which he or she has already been held accountable. Since Ageas/Fortis had already been penalised and fined by the Rotterdam Appeal Court (College van Beroep) in relation to the first three communications, the Court only considered that Ageas/Fortis had breached the Law with respect to the Fourth Communication for the reasons referred to above.

On this basis, the Court annulled the Decision and, consequently, reduced the fines to EUR 250,000 for Ageas and EUR 200,000 for each of Messrs. Votron and Mittler.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.