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Thursday, August 19, 1999
8:41pm ET
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Brokerages reinstated as defendants in Bre-X suit
TEXARKANA, Texas, Aug 19 (Reuters) - Brokerage firms
Lehman Brothers, J.P. Morgan and Nesbitt Burns were
reinstated as defendants in an amended lawsuit filed
Thursday by investors who lost money in the Bre-X
gold-mining fraud two years ago. The amended suit was
filed in U.S. federal court in Texarkana, Texas, after a
judge dismissed the brokerage firms and four other firms as
defendants in the case on grounds that the plaintiffs'
allegations against them were not specific enough. Also
named as defendants are the now bankrupt Canadian firm
Bre-X Minerals Ltd., holding company Bresea Resources
Ltd, several former Bre-X officials and four other firms.
The plaintiffs are seeking unspecified damages against all
of the defendants. They have also requested class action
status for the case which is scheduled to go to trial in June
2000.
Bre-X Minerals Ltd. claimed to have discovered a huge
gold deposit at Busang in Indonesia, prompting a surge in
the company's stock price on the Toronto Stock Exchange.
After the claim turned out to be fraudulent the company's
share price collapsed from highs of around 250 Canadian
dollars to just a few cents.
The amended suit alleges that Bre-X and its officials
"intentionally deceived the investing public" about the gold
find to profit from the sale of Bre-X stock at inflated prices.
It also alleges that J.P Morgan, Nesbitt Burns and Lehman
Brothers knew there were doubts about the validity of the
Bre-X claims but continued to recommend Bre-X stock to
investors.
The four other firms named as defendants in the amended
suit are Canadian gold producer Barrick Gold Corp.,
Canadian engineering group SNC-Lavalin Group Inc. and
its subsidiaries P.T. Kilborn Pakar Rekayasa and Kilborn
Engineering Pacific Ltd. |
