BERLIN — Former EM.TV topper Thomas Haffa was fined 1.2 million euros ($1.3 million) Tuesday for misleading investors about the kidvidder licensing company’s financial state in 2000.
A Munich court’s unexpectedly stiff fine was a clear signal that it viewed the actions of Haffa and his brother and co-defendant, EM.TV’s former finance chief Florian Haffa, as a serious criminal offense. Florian Haffa received a $256,000 fine.
State prosecutors had asked Monday that the Haffas be sentenced to eight months of probation in addition to the fines.
The Haffas were accused of manipulating EM.TV’s share price by reporting inaccurate figures in 2000. The kidvidder included revenues from a nonexistent sale of “The Simpsons” to German broadcasting group ProSiebenSat 1, which never agreed to the deal. EM.TV eventually was forced to slash its annual earnings estimate by 90%, revealing losses of $1.2 billion in a profit warning and causing its stock price to plummet 90%.
Tuesday’s ruling is expected to pave the way for an onslaught of lawsuits by former shareholders seeking damages. “We’re not talking about some little farm here,” said prosecutor Peter Noll. “We’re talking about a — if not the — market leader on the Neuer Markt.”
The Haffas’ actions caused widespread mistrust among investors toward the management of publicly listed companies, Noll added.
Judge Huberta Knoeringer said the Haffas were guilty of incorrectly presenting the company’s financial state.
“The verdict is by no means just,” said Thomas Haffa, who is planning an appeal. With the Haffas’ personal assets estimated at nearly $270 million, some observers said the sentence was light compared with the losses suffered by shareholders.
According to legal experts, new laws introduced last year made prison sentences unlikely for the Haffas, since their manipulation of the company’s half-year results did not improve EM.TV’s stock price.
The five-month trial has broken ground for Germany’s legal establishment, which is finding its footing around the intricacies of the securities markets. It is expected to be a template for future litigation resulting from a number of recent stock market scandals.