NEW YORK, September 26 2014 – Cartica Management, LLC today confirmed that the United States District Court for the Southern District of New York dismissed Cartica’s complaint against CorpBanca, S.A. and affiliates of Alvaro Saieh, among others. The Court’s decision was based on technical grounds, and the Court made no determination regarding the substantive fraud claims raised by Cartica or the merits or fairness of the proposed transaction with Itaú.
Cartica noted its disappointment that the Court dismissed its securities fraud claims on the technical question of whether Cartica may seek an injunction under the US securities laws as a holder of 12.6 billion shares and 1.2 million ADRs representing 4.24% of CorpBanca’s outstanding shares. Cartica believes that the evidence shows that Alvaro Saieh, his associates and Itaú have engaged in a pattern of misrepresentation and willful failure to disclose critical information about the proposed CorpBanca – Itaú transaction. Their purpose has been to conceal the fact that the deal is grossly unfair to minority shareholders, and the Court made no findings to the contrary in its opinion.
The one-page description provided when the purported “merger” was announced at the end of January clearly indicated that Alvaro Saieh intended to keep the terms as hidden as possible. The Court’s ruling implicitly acknowledges that Cartica’s actions forced the Saieh Group, CorpBanca and Itaú to make public a raft of information that should have been provided to investors and the market going back years. Only through Cartica’s litigation in New York were the documents relating to this transaction made public as required by US securities laws. These disclosures remain incomplete: for example CorpGroup has not disclosed whether it has drawn on the $1.2 billion credit line that Itaú granted it as part of the deal -- a credit line that the Saieh Group indicated was in place merely to strengthen its hand in renegotiating its debts with other creditors. But the disclosures the Court cites in its ruling have allowed everyone to see the egregious terms of this transaction that benefit the Saieh Group at the expense of minority shareholders.
“From the start, our efforts to stop this transaction have been focused in Chile” said Cartica Managing Director Mike Lubrano. “The New York action was focused on disclosure and a fraud committed on Cartica by Alvaro Saieh. Our suit in US Federal Court forced the Saieh Group and Itaú to disclose critical information they were required to make public under US securities laws and today’s ruling in New York does nothing to end our efforts in Chile to stop this abusive transaction from proceeding.” On the same day that Cartica filed its suit in US Federal Court, it requested a ruling from the Chilean securities regulator that the CorpBanca – Itaú transaction as currently structured is illegal under Chilean law. Cartica is confident that its arguments before the regulators and the courts in Chile will prevail and that the purported merger will ultimately be prohibited from proceeding under its current terms. In the event the transaction does close as currently structured, Cartica is also committed to pursuing all other remedies available to it in the Chilean courts, including holding CorpBanca’s directors and officers personally responsible for any breach of fiduciary duty to shareholders.
Regulators and the courts must not compromise on the principles of transparency and fair treatment of investors if capital markets are to function effectively. Sadly, the actions of the Saieh Group and Itaú violated both these principles and have called into question Chile’s position as a safe destination for investment. Securing justice for CorpBanca’s shareholders is therefore essential to restoring the confidence of both domestic and foreign investors in the Chilean market.
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