In re VEON Ltd. Securities Litigation
- Andrew Carter
- 1:15-cv-08672
- U.S. District Court · Southern District of New York
- 14
In re VEON Securities Litigation: Judge Carter ruled that three corrective disclosures could proceed and three could not.
Lead Plaintiff Boris Lvov and the proposed investor class may proceed using three specified corrective disclosures, while the three other new disclosures cannot be used. Defendant Veon Ltd. is affected by which alleged disclosures remain available in the litigation.
What happened
In re VEON Ltd. Securities Litigation is a securities class action brought by Boris Lvov against Veon Ltd. The case concerns statements about Veon’s business in Uzbekistan, its internal financial controls, and alleged bribery investigations.
The court considered whether six newly alleged announcements could be connected to statements previously found actionable. Such a connection would allow the announcements to help show that the alleged false statements caused investors’ losses. Veon argued that most of the announcements could not be used for that purpose.
Judge Andrew L. Carter, Jr. ruled that the March 24, 2014, December 4, 2014, and October 30, 2015, disclosures related to the earlier actionable statements and could proceed. He ruled that the January 8, 2013, August 20, 2015, and October 31, 2015, disclosures did not relate to those statements and could not proceed.
The detailed version
- In re VEON Ltd. Securities Litigation · No. 1:15-cv-08672
- Andrew Carter
- Jan. 10, 2025
Background
Lead Plaintiff Boris Lvov brought this securities class action against Veon Ltd., formerly known as VimpelCom Ltd., under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Securities and Exchange Commission Rule 10b-5. The case concerns American Depositary Shares purchased during the stated class period by people who held the shares through at least one corrective disclosure. A corrective disclosure is information that allegedly reveals the truth concealed by an earlier false statement and helps establish that the statement caused an investor’s loss.
In a 2017 order, the court allowed claims based on three categories of alleged false statements concerning: equal legal protection for telecommunications companies in Uzbekistan; the reasons for VimpelCom’s financial success there; and the company’s effective internal controls over financial reporting. The court also allowed six earlier corrective disclosures concerning investigations, alleged bribery, and related events.
In 2023, Lvov filed a Third Amended Complaint adding three alleged false statements and six new corrective disclosures. In a September 2024 order, the court dismissed the new false-statement allegations with prejudice and denied without prejudice the motion to dismiss concerning the new corrective disclosures. The court then required briefing on whether those disclosures related to the statements already found actionable in 2017.
Legal standard
The court applied the standard for a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6). At that stage, the court accepts the complaint’s factual allegations as true, draws reasonable inferences for the plaintiff, and decides whether the complaint is legally sufficient. It does not weigh evidence that might later be presented at trial.
For a securities-fraud claim, the plaintiff must adequately allege, among other things, a material false statement, economic loss, and loss causation. Loss causation means showing that the alleged false statement concealed information that, when revealed, negatively affected the security’s value. The court analyzed the disclosures under a “materialization of risk” theory, which requires allegations that the loss resulted when a risk concealed by the alleged false statement became real.
Analysis
The court previously held that the concealed risk was that VimpelCom’s position in Uzbekistan was weaker than represented because of reliance on bribes. The court therefore asked whether each new disclosure revealed information that made that risk real and was sufficiently connected to VimpelCom’s alleged misstatements.
January 8, 2013 disclosure
This disclosure concerned an investigation of VimpelCom competitor TeliaSonera and information about TeliaSonera’s connection to Takilant. The court held that the connection to VimpelCom was too indirect because the investigation targeted a competitor, not Takilant, VimpelCom’s alleged business partner. This disclosure did not relate back to the earlier actionable statements.
March 24, 2014 disclosure
This disclosure concerned Swedish prosecutors’ finding of a concrete basis to believe that Gulnara Karimova orchestrated, controlled, and primarily benefited from the bribery scheme involving Takilant and TeliaSonera. The court found the alleged connection to VimpelCom more direct because the disclosure implicated Takilant and Karimova and suggested that VimpelCom had conducted transactions structured to benefit Karimova. The disclosure therefore related back to all three earlier actionable statement categories.
December 4, 2014 disclosure
The parties did not dispute that this disclosure related to the 2017 statements. The court held that it related back to those statements.
August 20, 2015 disclosure
This disclosure concerned United States and Swiss investigations, including efforts to freeze or seize money connected to Takilant and an expanded investigation of Karimova. Although the court found the disclosure directly connected to VimpelCom’s alleged bribery risk, it held that the disclosure did not reveal new concealed information. The earlier disclosures had already revealed the relevant information about Takilant’s role. This disclosure did not relate back to the earlier actionable statements.
October 30 and 31, 2015 disclosures
The October 30 disclosure concerned information suggesting that senior Telenor officials knew about the alleged bribes, which in turn suggested that senior VimpelCom officials might also have known. The court found that disclosure sufficiently direct and held that it revealed new information about executive knowledge. It related back to the earlier actionable statements. The October 31 Bloomberg article merely reported that a Norwegian-language article published the prior day contained more details; it did not itself provide new information. The court held that the October 31 disclosure could not support loss causation and did not relate back.
Disposition
The court held that the newly alleged corrective disclosures dated March 24, 2014; December 4, 2014; and October 30, 2015, related back to the earlier misstatements found actionable in 2017 and could proceed. It held that the disclosures dated January 8, 2013; August 20, 2015; and October 31, 2015, did not relate back and that Lvov could not proceed with them. The parties were ordered to contact Magistrate Judge Ona T. Wang about general pretrial matters.
Read the full 14-page opinion on CourtListener, the free public archive maintained by the Free Law Project.