Friday January 8, 6:58 pm Eastern Time
Canadian Bre-X investors barred from U.S. lawsuit
TEXARKANA, Texas, Jan 8 (Reuters) - A Texas judge dealt a setback on Friday to Canadian
investors that were fleeced in the Bre-X Minerals Ltd. gold mining fraud by ruling they could not
take part in a U.S. lawsuit seeking billions of dollars in damages.
U.S. District Judge David Folsom said in a written order that Canadians who bought shares in
disgraced Bre-X on Canadian exchanges were not covered by U.S. law because the violations
alleged in the lawsuit did not take place in the U.S.
''It's a disappointment,'' said Clint Docken, a Calgary, Alberta-based lawyer representing thousands of Canadian investors
who wanted in on the U.S. suit. ''The feeling was that the best place to litigate the issue was in the U.S. because there was a
potential for the court to take worldwide jurisdication.''
Texas has a reputation for awarding plaintiffs huge settlements in class action suits. Another big lawsuit is currently under
way in the Canadian province of Ontario.
In what was the largest stock fraud ever, Calgary-based Bre-X shocked the world's mining and investment industries in 1997
when it was revealed that its much-hyped gold find at Busang in Indonesia was actually cooked up in an elaborate salting
scam and deemed worthless.
Shareholders lost as much as C$6 billion ($4 billion) when Bre-X's stock -- whose value had skyrocketed for months on
giddy recommendations from even the most seasoned analysts -- was delisted and the company vaporized amid the scandal.
Several shareholder lawsuits later filed in the U.S. were consolidated into the Texarkana suit, in which the plaintiffs are
seeking class action status.
Houston attorney Paul Yetter, who was working with Docken on the case, agreed Folsom's ruling was a blow, but that an
appeal would be considered.
"At the moment we are looking at and reviewing the order and evaluating our options. We are certainly not giving up on the
issue,' he told Reuters.
Docken said his clients might now seek to join the Ontario suit, file their own in that province or have their case heard in an
Alberta court.
The suits allege that Bre-X officials, including Chief Executive David Walsh, and investment firms such as U.S.-based J.P.
Morgan and Lehman Brothers, participated in a conspiracy to inflate the company's stock by issuing false claims about gold
deposits.
Walsh died last June in the Bahamas, where he and his wife lived in an opulent seaside mansion, after suffering a massive
stroke.
The U.S. lawsuit was filed on behalf of shareholders who bought Bre-X common stock between January 17, 1994 and May 2,
1997. Yetter said the plaintiffs included ''tens of thousands'' of people, of whom at least half were Canadians.
Even without the Canadian shareholders, ''this still could be a billion dollar lawsuit,'' Yetter said. He estimated that U.S
shareholders lost at least $2 billion on Bre-X stock.
($1 equals $1.51 Canadian)
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