Shareholders sue failed Ashikaga Bank, former management

UTSUNOMIYA, Tochigi Pref. (Kyodo) A group of Ashikaga Bank shareholders whose stock became worthless when the bank collapsed and was nationalized last year sued for damages Tuesday.

They are accusing the bank of providing false information about its financial state and engaging in illegal share-solicitations.

The group is composed of five corporate and 29 individual shareholders.

They are seeking 340 million yen in compensation from the Utsunomiya-based bank as well as from 21 former executives and ChuoAoyama Audit Corp., the Tokyo-based accounting firm responsible for auditing the bank.

According to the lawsuit, the plaintiffs obtained their stakes in the bank when it issued shares in 1999 and 2002.

Their shares were transferred to a holding company, Ashikaga Financial Group Inc., which was established to take control of the bank, but they became worthless when the bank collapsed in November.

The plaintiffs argue that the bank deliberately provided false information in securities filings by claiming it had a positive net worth in the fiscal years that ended in March 1999 and March 2001, just before the shares were issued, when in fact it had a negative net worth.

They also say ChuoAoyama Audit Corp. failed to address the problem.

The auditor was renamed ChuoAoyama PricewaterhouseCoopers in April when it became part of Pricewaterhouse Coopers International Ltd., one of the world’s major accounting groups.

The plaintiffs also claim bank employees made sales pitches to buy new shares that were tantamount to illegal solicitation.

The employees allegedly boasted that the bank — which was the largest in the prefecture — “will not collapse because it has the government’s blessing” and that “you will definitely see returns if you wait five years, and the share price will definitely go up.”

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