BPCE - Risk Report - Pillar III 2020

10 LEGAL RISKS

LEGAL AND ARBITRATION PROCEEDINGS – NATIXIS

Criminal complaint coordinated by ADAM

In March 2009, the Paris public prosecutor’s office (Parquet de Paris) launched a preliminary investigation into a complaint filed by Natixis minority shareholders and coordinated by the Association de Défense des Actionnaires Minoritaires (ADAM – Association for the Defense of Minority Shareholders). As the plaintiffs have initiated civil proceedings, a judicial investigation opened in 2010. On February 14, 2017, Natixis came under investigation for false and misleading information on account of two messages sent in the second half of 2007, at the beginning of the subprime crisis.

After judicial investigation, a committal for trial was ordered on June 28, 2019. The committal concerns only one of the messages, disseminated on November 25, 2007, explaining the risks to which Natixis was exposed at the time as a result of the subprime crisis. The second message was dismissed. Maintaining that no offense was committed, Natixis will present its defense, and the Criminal Court will render its judgment.

MMR claim

In 2007, Ixis Corporate & Investment Bank (the predecessor of Natixis) issued EMTNs (Euro Medium Term Notes) indexed to a fund that invested in the Bernard Madoff Investment Securities fund. Renstone Investments Ltd (the apparent predecessor of MMR Investment Ltd) is alleged to have subscribed, via a financial intermediary acting as the placement agent, for these bonds in the amount of $50 million. In April 2012, MMR Investment Ltd filed a joint claim against Natixis and the financial intermediary before the Commercial Court of Paris, claiming not to have received the bonds, despite

having paid the subscription price to the financial intermediary. The claim mainly concerns the reimbursement of the subscription price of the bonds and, and as an alternative, the annulment of the subscription on the grounds of defect in consent. On February 6, 2017, the Commercial Court of Paris dismissed all of MMR Investment Ltd.’s claims. This ruling was upheld by the Paris Court of Appeal on October 22, 2018. MMR Investment Ltd. submitted an appeal. The case is ongoing.

Securitization in the United States

Since 2012, five separate legal proceedings regarding residential mortgage-backed security (RMBS) transactions executed between 2001 and mid-2007 have been initiated against Natixis Real Estate Holdings LLC before the New York Supreme Court. Two of these proceedings relate to accusations of fraud. One was dismissed in 2015 as time-barred. Some of the claims relating to the second case were also dismissed as time-barred and, in 2018, Natixis settled the outstanding claims before the court issued a final ruling on the merits of the case.

Three of these five proceedings have been brought against Natixis, purportedly on behalf of certificate holders, alleging that Natixis failed to repurchase defective mortgages from certain securitization transactions. Two of them were dismissed as time-barred, and the plaintiffs’ appeals were also dismissed. As for the only proceedings currently in progress, Natixis considers for multiple reasons that the claims against it are unfounded, in particular as they are time-barred (and because the plaintiffs do not have standing to act).

EDA Selcodis

Through two complaints filed on November 20, 2013, Selcodis and EDA brought claims before the Paris Commercial Court against Natixis and two other banks for unlawful agreements, alleging that such actions led to the refusal to grant a guarantee to EDA and to the termination of various loans. Selcodis is asking for compensation for the losses purportedly suffered as a result of the court-ordered liquidation of its subsidiary EDA, and is requesting that the defendants be ordered to pay damages and interest, which it assesses to be €32 million. For its part, EDA is requesting that the defendants be ordered to bear the asset shortfall in its entirety, with its amount being calculated by the court-appointed receiver.

Natixis considers all of these claims to be unfounded. On December 6, 2018, after consolidating these claims, the Paris Commercial Court found that the statute of limitations had been reached and the cases are now closed. The plaintiffs filed an appeal against this ruling in January 2019. The judgment was delivered on June 24, 2020. The Court of Appeal ruled out the expiry of the current proceedings. This judgment is subject to appeal.

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RISK REPORT PILLAR III 2020 | GROUPE BPCE

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