Tuesday July 13, 8:36 pm Eastern Time
U.S. court drops brokerages from Bre-X lawsuit
TEXARKANA, Texas, July 13 (Reuters) - A U.S. federal court on Tuesday dismissed brokerage
firms Lehman Brothers, (NYSE:LEH - news) J.P. Morgan, (NYSE:JPM - news) Nesbitt Burns
(Toronto:BMO.TO - news) and four other companies as defendants in a class-action lawsuit
brought by shareholders in the failed Bre-X gold mining venture.
U.S. District Judge David Folsom let stand the main lawsuit against Canada's bankrupt Bre-X
Minerals Ltd. but ruled the plaintiffs had not been specific enough in filing fraud claims against the
brokerages and others.
The suit was filed in the wake of the spectacular collapse of Bre-X in 1997 after it revealed it had faked a gold find in
Busang, Indonesia that had been touted as the biggest of the century.
Shareholders are seeking damages for up to $2 billion in the main lawsuit against Bre-X and holding company Bresea as
well as eight former Bre-X officers.
The judge ruled in response to motions from the seven outside companies, who asked to be dismissed from the suit before it
comes to trial in June 200O.
Bre-X's share price plunged from heights of $250 Canadian dollars to 2-1/2 Canadian cents. Bre-X's chief geologist Michael
de Guzman died mysteriously as the scandal unfolded, falling out of a helicopter, and Bre-X Chief Executive David Walsh
died in June 1998 after suffering a stroke in the Bahamas.
As part of the class-action lawsuit, shareholders alleged that Lehman, J.P. Morgan and Canada's Nesbitt Burns knew there
were questions about the validity of Bre-X's claims but that they helped hype the company's stock for their financial gain.
''In many instances, however, the plaintiffs have failed to make these allegations with the required level of particularity,''
Judge Folsom found.
The judge's ruling also dismissed from the lawsuit Canadian gold producer Barrick Gold Corp. (Toronto:ABX.TO - news)
and engineering and construction group SNC-Lavalin Group Inc. (Toronto:SNC.TO - news) and its subsidiary mineral testing
and mine engineering companies P.T. Kilborn Pakar Rekayasa and Kilborn Engineering Pacific Ltd.
The ruling allows the plaintiff's 30 days to decide whether to replead, or bring in new arguments to support their claims
against the brokerages and other companies.
''Judge Folsom's order is very long and detailed and we're going to study it very carefully and decided where to go from
here,'' Paul Yetter, lead attorney for the shareholders, told Reuters.
More Quotes
and News:
Bank of Montreal (Toronto:BMO.TO - news)
Barrick Gold Corp (Toronto:ABX.TO - news)
JP Morgan & Company Inc (NYSE:JPM - news)
Lehman Brothers Holdings Inc (NYSE:LEH - news)
SNC-Lavalin Group Inc (Toronto:SNC.TO - news)
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