Spain probes Bankia IPO; Rato named suspect
MADRID (MarketWatch)--Spain's national court Wednesday opened a criminal investigation into the stock market listing of
The probe was launched by an investigating judge following a complaint by a small Spanish political party, Union, Progreso y Democracia that accuses Bankia (BKIA) , its parent company and the board members of both companies of fraud, misappropriation of funds, and the falsification of the annual results for 2011 in relation with last year's initial public offering of Bankia.
Rato, a former head of the International Monetary Fund and Spain's deputy Prime Minister under a previous conservative government, wasn't immediately available for comment. Bankia had no comment on the probe.
Most of the shares in the listing were sold to Spanish retail investors, many of them clients of the bank itself, and these investors have now lost more than 75% of their investments in less than a year. They claim that Bankia's listing prospectus was misleading.
The government in May moved to nationalize Bankia with the injection of 19 billion euros ($23.8 billion) into the troubled lender.
This is the third Bankia-related lawsuit that results in the opening of a criminal probe, but the first one to specifically cite Rato and other board members as suspects. Miguel Bernard, a far-right activist behind the first lawsuit against Bankia, back in May, said Wednesday he anticipates that all of the cases will be wrapped together into one in coming weeks, in accordance with usual practice in Spain's legal system.
Under Spanish law, anyone can file lawsuits in a case, even if they're not involved parties, which often leads to these cases being bundled by judges.
These developments come after Spain's state prosecutor's office last month launched an investigation into the legality of a seven-way merger of Spanish banks that created Bankia SA, shortly after the Spanish government moved to nationalize the ailing lender.