Just three days later – and thus probably faster than ever before in a comparable case – lawyer Maximilian Weiss from the law firm Weisswert in Stuttgart filed the first shareholder lawsuit. He demands damages and applied for an investor test case (KapMuG) (Az. 2 – 32 O 104/22). His accusation: “Adler repeatedly informed the capital market incorrectly and incompletely and withheld insider information,” explains attorney Weiss. Adler declined to comment on the lawsuit.
The real estate group has been in focus since October 2021. At that time, the British short seller Fraser Perring accused the group of serious manipulations in the valuation of the real estate. Adler rejected this and commissioned KPMG Forensik to clarify the matter.
On April 22, Adler released the results of the special investigation. The group was essentially relieved of the allegations. Deficiencies were only found in the documentation and in the processing of some transactions. It was all the more surprising that Adler announced on April 29, after the stock market closed, that the auditor KPMG Luxembourg would refuse to certify the 2021 annual financial statements due to missing documents.
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Lawyer: Adler should have informed about the impending notice of refusal
“The fact that a notice of refusal is imminent will not only have become clear on the evening of April 29th. That must have been apparent in the days beforehand,” Weiss believes, emphasizing: “This risk is price-sensitive and must be published.”
Weiss therefore sees a violation of the ad hoc disclosure requirements, which stipulate that companies must inform the capital market immediately about circumstances affecting the share price. He wants to claim the “price difference damage” for his client. Depending on the time of purchase and the holding period, this amounts to at least 24.81 to over 50 percent of the respective purchase price.
Because numerous investors are affected, according to Weiss, a KapMuG procedure makes sense. As a result, the central questions are clarified in a model case in a uniform and conclusive manner for all investors who are suing. The court must determine the model plaintiff, but Weiss has already come into focus with his application. “For me, it’s about designing the process right from the start,” Weiss admits openly. Leading a KapMuG procedure also brings publicity to the lawyer.
Parallels to the Wirecard case
Other law firms also suspect claims for damages. “Shareholders and investors have every reason to be concerned and should defend themselves,” the law firm Dr. Stoll & Sauer and warns: “Anyone who hesitates too long could face a total loss.” Adler reminds “fatally of the Wirecard case”. The payment service provider was also confronted with allegations of fraud by Fraser Perring and even went bankrupt in the end.
But Marc Liebscher, CEO of the SdK investor representation, points out: “If Adler does not survive, there is no point in suing an insolvent opponent.” If Adler goes bankrupt during the proceedings, the plaintiffs must register their claims in the insolvency table. If a lawsuit was successfully filed before any insolvency, the insolvency administrator may even be able to reclaim the money, explains the lawyer.
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Weiss was the first, but his client will soon see no money. “A KapMuG procedure is not suitable for quick success, because it always takes much longer than an individual lawsuit,” explains Liebscher. He refers to the Telekom case, which lasted 20 years.
Nevertheless, the first lawsuit scares investors and also puts competing law firms under pressure. Marc Tüngler from the DSW shareholders’ association criticizes this: “As with Wirecard, we are seeing a greyhound race between the law firms at Adler. That is unworthy and in the end does more harm than good.” Tüngler argues: “Early lawsuits are usually lost because the facts of the case have not yet been properly worked out and the lawsuit therefore does not have enough substance.” At the moment, Adler is still standing not sure what happened.
Bad quick shot hinders further lawsuits
“In general, you have to look at a lawsuit like a new investment because it generates costs,” says Daniel Bauer, CEO of SdK. It is true that the first lawsuits are often without cost risk for the individual plaintiffs because a litigation funder covers them.
Nevertheless, there are disadvantages. “Anyone who has lost in court once cannot sue again later,” explains Wolfgang Schirp, an investor lawyer from Berlin. What annoys Tüngler even more: A bad quick shot also has negative effects for the other people affected. “The courts have already considered the case and formed an opinion. Subsequent lawsuits have to fight against this,” observes Tüngler.
Weiss” lawsuit comprises 47 pages and is nevertheless very narrow. His client initially only had claims from a purchase of Adler shares on April 28. asserted. “We’re starting with the simplest case, but we want to extend the period for damages under the KapMuG to at least all share purchases from April 9, 2020 and, if necessary, also include other opposing parties such as KPMG Luxembourg,” Weiss explains his strategy.
It may be months before the LG Frankfurt decides on Weiss’ KapMuG application, and investors can still join the process afterwards. DSW and SdK are therefore currently advising to wait and see what else will be made public. The limitation period for any claims is three years. The SdK is also aiming for a special audit at the Adler Group and the subsidiary Adler Real Estate.
More: Interview: How Stefan Kirsten wants to save the Adler Group