(Bloomberg) -- The former chief executive officer of Banca Monte dei Paschi di Siena SpA, Fabrizio Viola, was cleared of false accounting and market manipulation, reducing legal risks for the lender.
The Milan appeals court exonerated Viola and ex-chairman Alessandro Profumo in a ruling on Monday, overturning a previous guilty verdict. The court said the alleged crimes didn’t take place, according to Ansa newswire. Prosecutors can still appeal the ruling to Italy’s top court.
Paschi shares rose as much as 3.9% in Milan on the news as investors see the ruling as curtailing risks related to litigation and out-of-court claims for the lender. The criminal allegations were linked to financial disclosures from the years 2012 through the first half of 2015.
The court decision is the latest in a long-running legal saga surrounding Paschi, and the second one in less than two months overturning a guilty verdict. They revolve around derivatives transactions, dubbed Santorini and Alexandria, that Paschi allegedly started using in 2008 and 2009, respectively, to hide losses.
In the decade that followed, Paschi piled up more than €20 billion in losses as it burned through the cash that shareholders and taxpayers kept shoveling into it through various financing rounds. The bank has since been restored to a more stable footing and the Italian government has recently started selling its stake.
Three years ago, Viola and Profumo were convicted of improperly booking the Santorini and Alexandria transactions as repurchase agreements instead of derivatives. The two contracts were signed years before their arrival at the helm of Paschi.
In a separate trial in October, Italy’s top court upheld the acquittal of former executives at Deutsche Bank, Nomura and Paschi over charges of market manipulation and false accounting at the Italian bank between 2008 and 2012. The executives had been accused of using the complex trades to hide losses.
Read More: Italy’s Court Upholds Acquittal of Ex Bankers in Paschi Case
In the wake of the October ruling, the bank reduced its estimate for those claims to €2.9 billion ($3.1 billion) and downgraded from “possible” to “remote” the risk related to a number of them.
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