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Gold/Mining/Energy : BRE-X, Indonesia, Ashanti Goldfields, Strong Companies. -- Ignore unavailable to you. Want to Upgrade?

To: Stiltskin who wrote (27687)	1/20/1998 11:53:00 PM
From: strenlich	Read Replies (2) \| Respond to of 28369

Bre-X filing attacks Wall Street giants By SANDRA RUBIN The Financial Post Two Wall Street powerhouses should have spotted signs of fraud at Bre-X Minerals Ltd. because they had employees with expertise visit its Indonesian site and review reports containing clear red flags, says a recent filing in a Texas lawsuit. J.P. Morgan Securities Inc. and Lehman Brothers Inc. have said they were duped along with everyone else by the multibillion-dollar gold scam. They've filed motions asking the blockbuster U.S. class action be thrown out of court. But Houston lawyer Paul Yetter, who is leading the 21-firm class action, countered the investment banks are simply scrambling to downplay their involvement with the disgraced Calgary exploration company. "J.P. Morgan and Lehman - who were so eager to impress investors with the importance of their information about Bre-X - cannot now dismiss their own statements in hindsight as mere puffery, optimism [or] 'off-the-cuff' remarks," he said in an 80-page filing opposing motions to have the case dismissed. The document says J.P. Morgan's role in the fiasco, for starters, goes "well beyond the sanitized description" the company paints in its motion. It claims the firm, Bre-X's financial adviser, had two employees working on Bre-X who were trained geologists or engineers - David Neuhaus and Doug McIntosh. "Plaintiffs allege that Neuhaus and McIntosh paid several visits to Busang; that they reviewed and analysed the internal studies prepared by Kilborn [Engineering]; and that those studies contained 'contradictory facts' sufficient to alert anyone with a geological training, like Neuhaus and McIntosh, to the fraud, had they been acting with any care." The court document also rips into Lehman Brothers and its senior gold analyst, Daniel McConvey, for failing to report on any irregularities after visiting Busang. "The red flags were unavoidable, beginning with the absence of gold at the surface and the unorthodox practice of crushing whole core samples rather than saving samples for future confirmation," says the document, filed in Texarkana, Tex. "Despite knowing material adverse facts, Lehman's coverage of Bre-X was wildly optimistic from the outset, and it continued to tout the stock as evidence of fraud mounted." In an earlier motion to dismiss, Lehman said it wrote just one research report on Bre-X, relying on information publicly released by the company, and it wasn't in on any of the wrongdoings. But in opposing the motion, Yetter says McConvey actually had "frequent, open access to Bre-X's internal corporate information," including information concealed from investors.