AIB faces two more class actions in US

LEGAL ACTION: Two further class actions have been filed against AIB in the US with investors seeking damages claiming the bank's Allfirst subsidiary concealed massive trading losses.

This brings to three the number of such actions lodged this week and comes a day before the investigator appointed by AIB chairman, Mr Lochlann Quinn, finalises his report into the circumstances of the $691 million (€795 million) fraud.

Mr Eugene Ludwig will deliver his report to Mr Quinn tomorrow. AIB's board of directors will meet early next week and decide what action to take in the light of his findings.

The bank will prepare a summary of Mr Ludwig's report and intends to outline the actions the board has sanctioned sometime early next week. The report will name individuals associated with the currency trader, Mr John Rusnak and his dealings which resulted in the massive loss, according to Mr Quinn.

AIB group chief executive, Mr Michael Buckley, returned from Baltimore yesterday after a series of meetings at Allfirst. The bank would not comment on whether he met with any of the other bodies investigating the fraud, which include representatives of the US Federal Reserve. He did not meet with the FBI which is also investigating the fraud.

AIB shares fell in early trading yesterday. The shares slipped to €12.27 but recovered some ground during the day to end at €12.52, down 24 cents. The class actions had some initial impact on the value of AIB shares listed on the New York market known as American Depositary Receipts (ADRs).

The latest legal actions were lodged by the law firms Stull, Stull & Brody, and Levy and Levy. A previous action was filed on behalf of investors by Finkelstein, Thompson & Loughran.

The complaints allege that AIB's financial reports since 1999 fraudulently failed to reflect at least $691 million of currency trading losses at Allfirst. It is based on a memo from 1999 obtained by the Wall Street Journal in which Allfirst officials expressed concern that Mr Rusnak was sometimes exceeding his risk limits.

The suits are seeking unspecified damages for investors who bought ADRs between 1999 and February 6th, 2002, the date when the bank announced the massive trading loss. These actions allow investors to seek remedies under US Federal Securities laws where they have lost money through fraud.