1king: thanks for the article. Here is another:
Thursday, May 28, 1998
Bre-X class action suit rides again
By SANDRA RUBIN
The Financial Post
Bay Street brokerages had a clear fiduciary duty when they recommended shares of Bre-X
Minerals Ltd. because investors could not get to the remote Indonesian jungle to assess the gold
strike for themselves, says a revised class action suit filed yesterday in Ontario.
Judge Warren Winkler threw out similar allegations in an earlier ruling,
saying a broker has fiduciary responsibilities only in exceptional
circumstances, such as when a client is elderly and infirm.
But in the amended statements of claim from Windsor, Ont., lawyer Harvey Strosberg, the
allegations are backed with beefed-up arguments.
The issue is key because if the allegations remain part of the pleading it could force the brokerages,
their analysts and even individual investment advisers to disclose how much -- if any -- Bre-X stock
they owned when they recommended it to investors.
Strosberg said he believes the brokerage-client relationship was fiduciary because Nesbitt Burns
Inc., First Marathon Securities Inc., CIBC Wood Gundy Inc., ScotiaMcLeod Inc., L‚vesque
Beaubien Geoffrion Inc. and TD Securities Inc. all sent analysts to Indonesia to assess the Busang
find and had them review and interpret technical statements Bre-X sent out.
"These people are more than simply order takers," Strosberg said. "When they sent someone to
Indonesia to evaluate the prospects and they evaluated the technical releases, we say that's more
than just an order taker, more than just an adviser."
In the case of Nesbitt, one of Bre-X's earliest and biggest boosters, investors relied on the firm and
the expertise of star analyst Egizio Bianchini, the pleading says.
"Because of the location of Bre-X's operations and the complexity of the data disclosed by Bre-X,
the Nesbitt Burns [investors] were vulnerable to misrepresentations and trusted Bianchini and
Nesbitt Burns to protect their financial interests."
Similar allegations are made against the other brokerages. The suit says they failed to tell investors
there were "significant inconsistencies and questions surrounding the drilling and analysis being
conducted at the Busang properties."
The new statements of claim also reveal some of the faces behind the Bre-X class action suit.
They include Eugene Schonberger, a watch maker who came from Germany at the end of the
Second World War, who has 6,500 worthless shares. He and his wife now own a small fur
business.
Fred Hines, a police officer, paid $23,073 for shares that are now worthless; and Kanta Mehnta, a
62-year-old widow, who was laid off from her job in 1996, paid $11,785 for valueless shares she
still holds.
BREAKING NEWS
MARKET WATCH
BIZ TICKERS
MUTUAL FUNDS
MONEY RATES
BIZ SEARCH
Fonorola wins time to hunt
B.C. chops stumpage rates
Philip shares sink
'Other' activities boost banks
CANOE home | We welcome your feedback.
Copyright c 1998, Canoe Limited Partnership.
All rights reserved. Please click here for full copyright terms and restrictions.
|
