UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK

The Securities and Exchange Commission ("the Commission") alleges:

SUMMARY

1. From August through November 2003, defendant Parmalat Finanziaria S.p.A. and its subsidiaries ("Parmalat" or the "company"), acting through certain of its directors and top managers, including former Chairman and Chief Executive Officer Calisto Tanzi and his son Stefano Tanzi, offered debt securities in the United States while engaging in one of the largest and most brazen corporate financial frauds in history. As Parmalat acknowledged in a press release dated December 19, 2003, the assets in its 2002 audited financial statements were overstated by at least 3.95 billion euros (approximately $4.9 billion at current exchange rates). Moreover, during 2003 Parmalat falsely stated to prospective U.S. bond and note investors to have used its "excess cash balances"-which actually did not exist-to repurchase corporate debt securities worth 2.9 billion euros (approximately $3.6 billion), when in fact it had not repurchased those debt obligations and they remained outstanding.

2. During the previous five years, Parmalat had induced U.S. investors to purchase bonds and notes totaling approximately $1.5 billion. In addition, in August 1996 Parmalat sponsored an offering of American Depositary Receipts ("ADRs") in the United States, with Citibank, N.A., headquartered in New York City, as depositary. Parmalat actively participated in the establishment of the ADR program.

3. By engaging in the foregoing conduct, Parmalat, directly, or indirectly through its officers, violated the anti-fraud provisions of the Securities Act of 1933. The Commission requests, among other relief, that this Court enjoin Parmalat from committing further violations of the federal securities laws and order Parmalat to pay a substantial civil monetary penalty.

JURISDICTION

4. The Commission brings this action pursuant to Section 20(b) of the Securities Act of 1933 ("Securities Act") [15 U.S.C. §§ 77t(b)].

5. This Court has jurisdiction over this action pursuant to Section 22(a) of the Securities Act [15 U.S.C. § 77v].

6. The defendant, directly and indirectly, has engaged in, and unless restrained and enjoined by this Court will continue to engage in, transactions, acts, practices, and courses of business that violate Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)].

THE FRAUDULENT SCHEME

A. The Defendant

7. Parmalat Finanziaria S.p.A. is a Parma, Italy-based company, whose main operating subsidiary, Parmalat S.p.A. sells dairy products around the world, employs 36,000 people, and has world-wide operations in thirty countries, including the United States. On December 24, 2003, Parmalat S.p.A. filed for bankruptcy protection with a court in Parma, Italy, and on December 27, 2003, the court declared Parmalat S.p.A. insolvent. Since 1990, Parmalat's stock has traded on the Milan Stock Exchange. Parmalat-sponsored ADRs were offered and sold in the United States in 1996 and currently trade in the United States in the over-the-counter market.

B. Admissions by Former Management of Parmalat

8. On December 9, 2003, Calisto Tanzi, then Parmalat's Chairman and Chief Executive Officer, and his son Stefano Tanzi, a senior Parmalat executive, met with representatives from a New York City-based private equity and financial advisory firm regarding a possible leveraged buyout of Parmalat. During that meeting, in response to a comment by one of the Tanzis about liquidity problems at Parmalat, one of the New York firm's representatives noted that Parmalat's financial statements showed that the company had a large amount of cash. In response, Stefano Tanzi stated that the cash was not there, and that Parmalat really had only 500 million euros in cash.

9. Later, Luciano Del Soldato, then Parmalat's Chief Financial Officer, joined the meeting. During a discussion of Parmalat's outstanding debt, Mr. Del Soldato stated that Parmalat's debt was actually 10 billion euros, much higher than the balance sheet showed. Mr. Del Soldato indicated that the balance sheet was incorrect because the company had not repurchased 2.9 billion euros of Parmalat bonds. The balance sheet falsely reflected that the bonds had been repurchased.

10. Based on these revelations, the New York firm's representatives offered to send members of the firm's restructuring group to meet with the Tanzis. The following day, representatives of the firm's restructuring group met with the Tanzis, and informed them that Parmalat needed to publicly disclose the facts disclosed to the New York firm if that firm were to continue to have any involvement. When it became clear that the Tanzis were unwilling to do so, the New York firm's representatives terminated their discussions with Parmalat.

C. The 2003 Note Offering and Previous Sales of Notes in the United States

11. From 1998 through 2002, Parmalat and certain of its top managers and directors, including Calisto Tanzi and its then Chief Financial Officer Fausto Tonna, actively marketed and sold nearly $1.5 billion in notes and bonds to U.S. investors. To offer and sell these debt securities, Parmalat participated in numerous road shows in the United States, and on numerous occasions held due diligence meetings for U.S. buyers of the bonds at its headquarters near Parma, Italy.

12. In August 2003 and continuing through November 2003, Parmalat fraudulently offered $100 million of unsecured Senior Guaranteed Notes to U.S. investors by materially overstating the company's assets and materially understating its liabilities. As Parmalat acknowledged in a press release dated December 19, 2003, the assets in its 2002 audited financial statements were overstated by at least 3.95 billion euros (approximately $4.9 billion at current exchange rates). In addition, during late 2003 Parmalat falsely stated to prospective U.S. bond and note investors that it used its "excess cash balances"-which actually did not exist-to repurchase corporate debt securities worth 2.9 billion euros (approximately $3.6 billion), when in fact it had not repurchased those debt obligations and they remained outstanding. The attempted $100 million note offering failed after Parmalat's auditors raised questions about certain Parmalat accounts.

D. Equity Securities Sold in the United States

13. An ADR is a receipt issued by a depositary bank and represents a specified amount of a foreign security that has been deposited with a foreign branch or agent of the depositary, known as the custodian. The holder of an ADR is not the title owner of the underlying shares; the title owner of the underlying shares is either the depositary, the custodian, or their agent. The depositary provides stock transfer services such as issuing and canceling ADRs, maintaining a register of holders, and distributing dividends in U.S. dollars. It is the receipts of deposit, rather than the actual securities of the issuer, that are traded in the U.S. markets. ADRs are tradable in the same manner as any other registered American security, may be listed on any of the major exchanges in the United States or traded over the counter, and are subject to the U.S. federal securities laws.

14. Parmalat sponsors its ADR program, meaning that Parmalat actively participated in the establishment of the ADR program and agreed to various terms concerning the ADRs, and to the rights and obligations of the parties involved (Parmalat, Citibank, and the owners of the ADRs). Citibank, N.A., the depositary for Parmalat's ADRs, provides transfer services.

15. Parmalat's ADRs were originally privately placed in the U.S. on August 9, 1996. The ADRs are traded on the over-the-counter market in a 20:1 ratio (20 Parmalat shares per ADR) and quoted in the "Pink Sheets." On December 19, 2003, the price of Parmalat's ADRs closed at 40 cents, down 85 cents — or 68 percent — from the previous close, on volume of 16,070 ADRs traded. Their price had fluctuated between $3.4 and $1.10 over the past year. Before December 19, 2003, the price of Parmalat ADRs had been artificially inflated by the materially false and misleading statements described above.

16. As of the end of 2002, Parmalat purportedly held 3.95 billion euros (approximately $4.9 billion) worth of cash and marketable securities in an account at Bank of America in New York City held by Parmalat's subsidiary Bonlat Financing Corporation ("Bonlat"). Bonlat is wholly owned by Parmalat and incorporated in the Cayman Islands. Bonlat's 2002 financial statements were certified by Bonlat's auditors based upon a false confirmation that Bonlat held these assets at Bank of America. The accounts and assets did not exist and the purported confirmation had been forged. These non-existent assets are reflected on Bonlat's 2002 books and records and, in turn, in Parmalat's 2002 consolidated financial statements, as well as in its consolidated financial statements as at June 30, 2003, which were provided to U.S. investors to whom Parmalat offered notes in August through November 2003.

17. In addition to grossly overstating the amount of the liquid assets in its 2002 and June 30, 2003 financial statements provided to U.S. investors, Parmalat provided those investors in August 2003 with a private placement memorandum that contained numerous material misstatements about the company's financial condition. For example, the memorandum falsely states: "Liquidity is high with significant cash and marketable securities balances...."

CLAIM FOR RELIEF

Violation of Securities Act Section 17(a)

18. Paragraphs 1 through 17 above are incorporated herein by this reference.

19. Defendant Parmalat, in the offer or sale of the securities described above, among others, by the use of means or instruments of transportation or communication in interstate commerce, or by the use of the mails, directly or indirectly: (a) employed devices, schemes or artifices to defraud; (b) obtained money or property by means of untrue statements of material facts or omissions to state material facts necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; or (c) engaged in transactions, practices or courses of business which operated or would operate as a fraud or deceit upon purchasers of securities.

20. In connection with the above described acts and omissions, defendant Parmalat, through its officers or members of its senior management, acted knowingly or recklessly. It knew, or was reckless in not knowing, that Parmalat's consolidated accounts for the fiscal year ending December 31, 2002, and for the periods commencing the first quarter 2003 through the third quarter 2003, inclusive, contained material misstatements and omissions.

21. By reason of the foregoing, Parmalat violated Section 17(a) of the Securities Act.

PRAYER FOR RELIEF

WHEREFORE, the Commission respectfully requests that this Court enter judgment:

A. Permanently restraining and enjoining Parmalat from violating Section 17(a) of the Securities Act;

B. Imposing civil monetary penalties on Parmalat pursuant to Section 20(d) of the Securities Act; and

C. Granting such other relief as this Court may deem just and proper.

Respectfully submitted,

Dated: December 29, 2003

http://www.sec.gov/litigation/complaints/comp18527.htm