NATIXIS_REGISTRATION_DOCUMENT_2017

RISKS AND CAPITAL ADEQUACY Legal risks

Legal risks 3.11

Like many banking groups, Natixis and its consolidated subsidiaries are involved in litigation before the courts and may be investigatedby regulatoryauthorities. As assessed at December 31,2017, the financial consequences of litigation deemed likely to have, or which have in the recent past had, a material impact on the financial situation of Natixis and/or Natixis and its consolidatedsubsidiariesas a whole, or on their profitabilityor their business,have been included in Natixis’ consolidatedfinancialstatements. The most significant disputes are described below. Their inclusion in the list does not indicate that they will necessarily have an impact on Natixis and/or its consolidated subsidiaries. The other disputesare deemedunlikelyto have a materialimpact on Natixis’ financial situation or profitabilityand/or that of Natixis and its consolidatedsubsidiariesas a whole, or have not reached a stage where it can be determinedwhetherthey will have such an impact. Madoff fraud OutstandingMadoff assets, net of insurance,were estimatedat €388.8million at December31, 2017, and were fully provisioned at this date. The effectiveimpact of this exposurewill dependon both the extent of recovery of assets invested in Natixis' name and the outcome of the measures taken by the bank, primarily legal. With this in mind, Natixis has appointedlaw firms to assist it in these recovery efforts. Furthermore, in 2011 a dispute emerged over the application of the insurance policy for professionalliability in this case, which had been taken out with successive insurers for a total amount of €123 million. In November 2016, the Paris Court of Appeal confirmed (like the CommercialCourt before it) the liability of the first-line insurers, in the amounts of the policies taken out, for the losses incurred by Natixis as a result of the Madoff fraud. The implementationof this ruling by all of the insurers is ongoing. In January and February2017, both of the first-line insurerssubmittedan appeal to the Court of Cassation. The hearing was held on January 31,2018. Deliberationsare in progress and the case has been transferredto the SecondCivil Chamberof the Commercial Division of the Court of Cassation.A new investigationwill take placewithinthe CommercialDivision. Irving H. Picard, the court-appointed trustee for Bernard L. Madoff Investment Securities LLC (BMIS), submitted a restitution claim concerning the liquidation of amounts received prior to the discovery of the fraud through a complaint filed with the United States Bankruptcy Court for the Southern District of New York against several banking institutions, including a $400 millionclaim against Natixis. Natixis denies the allegations made against it and has taken the necessarysteps to defend its position and protect its rights. Natixis has launched appeals, including a motion to dismiss, requesting that the case be dismissed on a preliminary basis or prior to any ruling on merit, and a motion to withdraw the reference to transfer certain matters to the United States district court. These proceedings LEGAL AND ARBITRATION 3.11.1 PROCEEDINGS

have been subject to numerous rulings and appeals and are still ongoing. A November 2016 ruling by the bankruptcy court dismissed a number of restitution claims initiated by the trustee on the grounds ofextraterritoriality.The case is ongoing. Furthermore, the liquidators of Fairfield Sentry Limited and Fairfield Sigma Limited have initiated numerous proceedings against investors having previously received payments from these funds for redemptions of shares (over 200 proceedings have been filed in New York). Some Natixis entities have been named as defendants in some of these proceedings. Natixis deems these proceedings to be entirely unfounded and is vigorously defending its position. These proceedingshave been suspendedfor severalyears, and in October 2016the bankruptcy court authorized the trustees to modify their initial claim. The defendants jointly responded in May and June 2017 and are awaitingthe announcementof the hearingdate. Criminal complaint coordinated by ADAM In March 2009,the Paris public prosecutor’soffice (Parquet de Paris) launched a preliminary investigationinto a complaint filed by Natixis minority shareholders and coordinated by the Association de Défense des ActionnairesMinoritaires (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 investigationfor two messagessent in the second half of 2007, at the beginningof thesubprimecrisis. The judicial investigationis still being conducted. Natixis Asset Management (formerly CDC Gestion) – Profit sharing In 2012, a complaintwas filed againstNatixisAssetManagement before the Paris District Court (Tribunal de Grande Instance de Paris) by 187 former employees of CDC Gestion (current name Natixis Asset Management).The subject of the complaint is the legal recognition of their rights to common law profit-sharing schemesfrom1989 to 2001. Following the application for a priority preliminary ruling on the issue of administrative constitutionalityraised by Natixis Asset Management on the interpretation of an article of the French Labor Code, on August 1, 2013, the Constitutional Council declared the first paragraph of Article L.442-9 of the French Labor Code in its version prior to Law No. 2004-1484 of December 30, 2005, to be unconstitutional and ruled that employees of companies whose share capital is predominantly held by public entities cannot call for a profit-sharingscheme to be applicableto them for the period during which the provisions declaredunconstitutionalwere in force. In September 2014, the Paris District Court ruled in favor of Natixis Asset Managementand dismissed all of the employees’ complaints.The employeesappealedthe ruling to the Paris Court of Appeal.On May 9,2016, the Court of Appealupheld the ruling and rejected the appeal filed by the plaintiffs. Employees have collectively submitted an appeal to the Court of Cassation. Ina ruling on February 28,2018, the Court of Cassation rejected the employees’collectiveappeal.

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Natixis Registration Document 2017