Saturday, March 20, 1999
Bre-X insiders must
stand trial in Texas
Sandra Rubin
Financial Post
Former insiders in Bre-X Minerals Ltd. will have
to stand trial in a class-action lawsuit filed in
Texas, a U.S. federal court judge ruled yesterday in
a key decision that means they could be on the hook
for some of the billions of dollars lost by investors
in the spectacular stock fraud.
Judge David Folsom also ruled that
Montreal-based SNC-Lavalin Inc. will be forced to
answer for its role in the salting scandal.
"They tried to hide, Judge Folsom said they
couldn't," said Paul Yetter, the Houston lawyer
who is leading the consolidated 23-firm suit. "Now
there's no more excuses. They'll have to defend
themselves on the merits."
The Bre-X insiders and the giant engineering firm
had been trying to have the case against them
thrown out on the grounds they are Canadians, or
Canadian companies, and not answerable under
U.S. securities law.
But in a 23-page ruling, Judge Folsom made it
clear that they indeed became answerable under
U.S. law by listing the stock on Nasdaq and
pitching it to U.S. investors.
"Every insider defendant engaged in one or more of
the following activities: securing Bre-X's Nasdaq
listing, approving and/or signing the allegedly false
Bre-X SEC filings; reviewing and/or writing the
allegedly false press releases; [and] promoting
Bre-X to investors and analysts in the United
States," he wrote.
The ruling affects the estate of David Walsh, the
late Bre-X chairman who died suddenly last
summer, his widow Jeanette, and Stephen
McAnulty, the tiny exploration firm's
vice-president of investor relations, among others.
The judge rejected arguments by SNC-Lavalin and
its two Kilborn Engineering subsidiaries that they
do not do business in Texas, or maintain offices
there, so are not answerable to its courts. SNC
supplied resource estimates pegging the supposedly
massive Indonesian strike at upwards of 70-million
oz.
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