Candidate for Bank of Israel Governor Named in Class-action Lawsuit

Mario Blejer, the former head of Argentina's central bank, is one of 17 people listed as defendants in New York suit over nationalization of Argentine oil company.

Argentine economist Mario Blejer, the leading candidate for Bank of Israel governor, has been named in an investor class-action suit brought in New York against the Argentine oil company YPF.

Blejer, a former head of Argentina's central bank, was one of the company’s 12 nonexecutive directors. He was one of 17 individuals named as codefendant, in addition to institutions that include the Credit Suisse, Goldman Sachs and Morgan Stanley investment banks, as well as Spanish energy company Repsol.

The lead plaintiff, the Michigan-based pension fund Monroe County Employees Retirement System, claims that YPF and its underwriters materially misrepresented the company ahead of a $1.07 billion public offering of American depositary shares in March 2011. The retirement system claims the defendants made false statements and omitted crucial information from a prospectus and other documents provided to investors ahead of the offering.

In particular, YPF allegedly failed to warn investors that it faces a heightened risk of being nationalized by the Argentine government due to its failure to reinvest profits into operations, thereby letting oil production and exploration decline, and its breach of concession contracts with Argentina's provincial governments.

In April 2012, YPF was nationalized by Argentine President Cristina Fernandez de Kirchner when the government seized Reposol's 51% controlling stake in the company. Following the announcement, YPF's American depositary shares fell to $13.12, 68% below their offering price of $41 per share. Reposol sued Argentina last May over the seizure of its YPF stake.

Blejer, along with the other members of the company's board of directors, was alleged by the lawsuit to bear responsibility for the publication of the prospectus and other allegedly misleading investment documents.

Blejer currently sits on the board of the Argentine real estate company IRSA, which is listed on the New York Stock Exchange. He has also served in recent years as the vice chairman of the Argentine mortgage lender Banco Hipotecario.

Bloomberg