Civil or Criminal Actions against companies or regulators

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Postby admin » Thu Jan 31, 2008 12:59 am

further to the class actions ongoing against at least one bank for foreign exchange gouging in RRSP accounts..........I direct you to this web site with a funny commercial to describe the way it feels to be hit with these bank costs.......and a solution that allows the customer to be treated fairly.

Enjoy

http://www.questrade.com/trading/regist ... cials.aspx
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Postby admin » Sun Sep 30, 2007 2:36 pm

September 30, 2007

Consumers fighting back
Class-action lawsuits on rise as buyers let companies beware
By LINDA LEATHERDALE, TORONTO SUN

September 30, 2007

Cellphone companies, automakers and toy manufacturers have all been the targets of recent class-action lawsuits launched by consumers tired of being kicked around.
There's a Viking saying: Don't get mad, get even. And one way for the downtrodden to get even are class-action lawsuits.

There was a time when you never heard of consumers banning together to hire a pit-bull lawyer and go after Goliath. But lately, the legal confetti has been flying.

Some say the one who let the legal hounds out was Erin Brockovich, portrayed by Julia Roberts in the popular 2000 movie.

Brockovich, with now deceased pugnacious lawyer Edward Masry, took on the mighty Pacific Gas & Electric Co. in a toxic pollution suit and won an amazing $333 million US for 648 residents in Hinkley, Calif.

Some will argue this is nothing but pure greed. Win a lawsuit and you've won the litigation lottery. In other words, it's all about the money and not justice.

But Regina lawyer Tony Merchant, whose firm, The Merchant Group, is involved in a host of class-action suits across the country, says that's not true. Most just want fairness and they're tired of being kicked around.

"People have become conscious that they don't have to be kicked in the face over and over again," said Merchant, a former Saskatchewan MPP.

Bruce Cran, president of the Consumers Association of Canada, says weak consumer protection laws in Canada are forcing consumers into the courts to fight for fairness.

Cran says he's miffed there is no longer a separate consumer ministry in Ottawa to advocate for consumer rights. Instead, consumers are lumped into Industry Canada, which Cran says shows industry is in the driver's seat, not consumers. That's despite the fact that consumers account for two-thirds of Canada's economic health and wealth.

"When the election rolls around, consumers should be asking the parties if they'll insist on consumer representation in cabinet," Cran said.

Other consumer advocates complain lax competition laws and a watchdog with no bark or bite allow powerful oligopolies to bully the little consumer. And heaven help them if they complain.

To me, this is bullying at its height. Sprint Nextel axed up to 1,200 of its customers for calling customer service too often, and told them to switch to another wireless carrier. In other words, Sprint fired its own customers. Whatever happened to the customer comes first? And that's in the U.S., where there's plenty of competition.

GAUGING CUSTOMERS

Here in Canada, my boss -- Pierre Karl Peladeau, CEO of Quebecor Inc. -- complains that three dominant players in the wireless market are forcing customers to overpay for service.

"The Big 3 wireless players (Bell, Rogers and Telus) have a stranglehold on competition and on your wallet," Peladeau said in a recent speech to the Empire Club in Toronto. He backed up his accusations with charts and graphs showing Canadians pay some of the highest cellphone fees in the world, while our access to new technologies lags.

Industry insiders accuse Peladeau of having a personal axe to grind because he wants entry into the market and is seeking a next-generation wireless network in Quebec.

Meanwhile, anger over high cellphone fees has led to a class-action lawsuit handled by Merchant's law firm. The lawsuit, certified in Saskatchewan court, claims Canadian cellphone companies are profiteering by charging customers system-access fees over and above their regular fees.

Most companies charge system access fees of $6.95 a month and the lawsuit, which tackles all players in Canada, including Rogers, Telus and Bell, claims "unjust enrichment" because providers make the fees look like they are being charged by federal regulators or going to maintain the system, when they are really going to the companies' bottom line, Merchant said.

When the industry was in its infancy, system access fees were originally paid by the consumer to Industry Canada, explained a spokesman with the Canadian Wireless Telecommunication Association. But by the mid-1980s, cellphone companies became responsible for collecting the fees, while Industry Canada upped the licensing fees charged to companies.

It's estimated the companies pay $150 million a year for use of the airwaves. But Merchant estimates the companies make more than $1.2 billion a year by charging Canada's 15 million cellphone users the system access fee.

The lawsuit is valued at more than $12 billion, plus interest. None of the lawsuit's allegations have been proven in court.

Another class-action suit made headlines as our loonie zoomed to hit parity with the U.S. Greenback, sparking howls of complaints from Canadians that they were overpaying for many goods, including magazines, computers, greeting cards and cars.

REVVING UP FOR LAWSUIT

Toronto class-action law firm Juroviesky and Ricci filed a $2-billon suit, on behalf of four Toronto residents, who claim the auto industry conspired to inflate the price of automobiles in Canada in an effort to discourage cross-border shopping.

Named in the lawsuit are the Canadian and U.S. Divisions of General Motors, Honda, Nissan and Chrysler. Also named are automobile dealer associations in Canada and the U.S.

The suit covers consumers who bought cars between August 2005 and August 2007, as the Canadian dollar was gaining strength, and claims the defendants attempted to control and limit cross-border shopping by:

- Forcing consumers to sign "no export clauses."

- Failing to honour warranties purchased on the other side of the border.

- Penalizing dealers who sold vehicles and threatening dealers who didn't comply.

Again, none of these allegations have been proven in court.

The latest class-action lawsuit, now making headlines, is another suit by Merchant Law Group, this time targeting toymakers Mattel Canada Inc., U.S.-based Mattel Inc., and its subsidiary Fisher-Price Inc.

About 750 consumers have joined this legal battle and Merchant believes many more will join.

"We've been contacted by people from right across the country," he said.

The suit was sparked by the recall of more than 20 million made-in-China toys over the past two months, as exports from manufacturers came under scrutiny for high levels of lead and design defects.

In the statement of claim, the plaintiffs argue the toymakers "conducted themselves in a wilful, wonton and reckless manner," and accuses the defendants of unfair business practices in dealing with customers and the public.

No Mattel spokespeople were available for comment. And again, none of these allegations have been proven.

Merchant said these are only a few of the lawsuits swirling in Canada. Others deal with the GST, stocks and bonds, and even Agent Orange.

Go to www.merchantlaw.com or e-mail Merchant at tonymerchant@canada.com

"There is no risk to consumers to join in," Merchant said. "If we lose in the court, the law firm pays. But if we win, consumers stand to gain financially and be part of getting companies to do the right thing."
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Postby admin » Fri Sep 28, 2007 10:55 am

With recent class actions announced against auto manufacturers or dealers for taking advantage of Canadian auto buyers for profit, it seems possible that similar action may be possible against Canadian financial service providers in the future.

Given strong evidence on issues like Canada's "world's highest" mutual funds fees, income trusts which some experts have called fraudulent "ponzi schemes", the made in Canada Asset Backed Commercial paper crisis which was designed to present huge risks to the buyers and huge returns to the sellers.............these plus a dozen other cases seem to suggest that the industry which promises Canadians a duty of care, and owes the client an obligation to place the client interests ahead of their own, may be on the hook for much larger amounts than the amount the CIBC paid out on ENRON. (that was $2.4 billion)

Some studies have placed the annual cost of financial abuse of Canadians by "trusted" financial firms and advisors, at between $30 billion and $60 billion per year.
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Justice Policy Committee - Justice Denied - Fred's Comment

Postby Stan Buell » Fri Aug 10, 2007 4:07 pm

SIPA made a joint presentation with the united Senior Citizens of Ontario to the Ontario Standing Committee on Justice Policy at the Ontario Legislature. However it apparently had little impact on the committee as the legislation was passed without revision to the reduced limitation periods from six years to two years.

SIPA received an e-mail from a small investors that had been submitted to the Committee and a copy was forwarded by the clerk to all members. The message has been filed as a public document but has not been published in any reports. I wonder how many significant comments are buried in this fashion.

I was impressed by Fred's message and fell that concerned citizens need to know there are many who are trying to make a difference. The reason we created SIPA was to try to provide a vehicle for concerned citizens to get together to work co-operatively to make changes for the better.

Here then is Fred's letter:

From: Fred Scholl [mailto:fredscholl@sympatico.ca]
Sent: Monday, April 24, 2006 8:02 AM
To: Freedman, Lisa
Subject: Bill 14, Access to Justice Act, 2006

Dear Madam,

Thank you for giving me this opportunity to express my thoughts on the subject of reducing the limitation period to 2 years.

Strictly speaking based on my personal experiences with the Canadian investment industry, I have to state that a 2 years limitation period in my case would not have been sufficient. I never pursued matters with two major Canadian financial institutions that to my mind were totally disinterested in my financial wellbeing, but strictly focused on maximising their revenues to the detriment of my financial wellbeing (my retirement funds, that I had managed to accumulate over 40 years). Statements in their ‘sales pitch’ were blatently false and misleading.

My source of information were the institutions that I was dealing with. I had no knowledge that an OSC or IDA even existed.

The OSC was brought to my attention by the ‘investment advisor’ of the brokerage arm of the second Canadian bank that I was dealing with. He stated, that I needed to hire a lawyer to address complaints and deal with the OSC. No mention at all of an IDA. It took me more then 2 years to even find out that they existed. Nowadays probably the public is more aware of the IDA due to their lobbying the former minister of finance the day of the announcement on Income Trusts.

The process for an uninformed investor (I at the time) is complex.

To begin with, the second bank sent me prospectuses on the mutual funds I had purchased through them about 1 month after the fact (4 separate envelopes of prospectuses, all received the same date – 1 month after the fact). Only then did I become fully aware of what I had purchased and the fees involved (penalties for early redemption, etc.).

Of course I cannot be sure that this was done on purpose, in order to prevent the lodging of a timely complaint. However it appears strange, that the post office would delay delivery of 4 separate envelopes.

In the end, I decided to write the whole sorry mess off to very bad personal judgement (trusting the Canadian financial industry).

Recently I did read in a financial publication an analysis by a ‘financial advisor’ (true professional, working based on fees. Not one of those people calling themselves ‘financial advisors’, but peddling specific mutual funds). She had examined a family’s investment structure. I immediately recognized, that the institution that family was dealing with, was the same firm I had been dealing with (same funds, same sales pitch, etc. probably the firm had some special incentive arrangement with those funds). No mention of the name of this fine institution, a cornerstone of Canadian society.

The conclusion of the professional was that their ‘investments’ were totally wrong for this family’s circumstances. The fees were enormous to boot. With authority of her client, she contacted the financial institutions to be informed, that they had no further interest in that account, requesting that the account be closed immediately, refusing to provide further information.

What I did find even more interesting is a brief follow up article in their next publication. They were astonished as to how much correspondence they had received from people stating that the family the article had covered must have been them Like I, such people immediately had recognized the institution involved (still no mention of the name of the institution), with identical negative results of their ‘investments’ (except fees of course).

I have closed the chapter on this unpleasant episode of my life. While I do blame myself for having been so trusting and blinded by a perception of honesty/integrity of well recognized Canadian financial institutions, I now trust no one. Now I do fully comprehend how this industry operates and how highly protected this industry is by Government. Unfortunately it was the most expensive lesson of my life at a time when I could least afford it (in retirement), no longer having the ability to make up for such losses.

Kind regards,

Fred

PS – I do not hold any income trusts due to my inability to figure out from their financial statements where the ‘distributable cash’ comes from.

When I did see one income trust come to market, my reaction was ‘you must be kidding me’. I lived in that province for 5 years. This firm constantly was in the local news. Labour disputes (strikes), bankruptcy, Provincial Government subsidies to keep this thing going. Complete closure was considered by Government as a possible option. Eventually sold to a Dutch company by the Province for peanuts, hailed at the time as a major coup, the Province no longer having to pump large sums of taxpayers money into this to keep it going.

THAT company being sold as an income trust to Canadian seniors/retirees ‘steady, predictable flow of revenue???’

Much must have changed over the past years. Their share price does not appear to support that theory, dropping like a rock. According to my calculations, well over 100 Million already has been wiped out of investment moneys.

I know, I know, not the responsibility of regulators. Investors are expected to exercise ‘due diligence’. The change in company name might hinder such efforts somewhat. (Or is ‘due diligence’ the responsibility of the financial institution, who’s ‘investment advisors’ sold this firm to seniors/retirees for the purpose of steady/predictable cash flow?

Well, no worry, reducing the period for possible claims to 2 years has tidied up possible liability in that area very nicely for such institutions – thank you.). Likely you do not recognize the firm I am referring to, not being in the news very much and you not having lived in that Province.

Hopefully that will be the case in years to come. I sincerely wish my perceptions are wrong, in the interest of those seniors/retirees that have invested hundreds of millions of Dollars into this.

One last, however, important point. I am certain, that there are many honest/competent people employed in the Canadian investment industry.

I simply have not found one (nor am I looking). There is no way for me to be reasonably sure that I can find one, as present status of self regulation (read unregulated) permits for honest and dishonest people to equally flourish side by side.

It took me probably 5 years to figure out what my options are in dealing with disputes. To then speak with a lawyer to be represented, I would think that a 10 years limitation period would be more realistic.

Keep in mind that the ‘investment public’ is not a firm, supported by qualified accountants, lawyers to detect wrongdoings. It takes a while to even figure out that wrongdoings did take place. Like I, many investors probably end up blaming themselves, for having put so much trust in the Canadian financial industry.

The Corporate Culture has changed in the Canadian financial industry. It appears to be all about maximizing revenue, large legal staff in order to ‘squash’ complaints, limiting/containing possible liability, lobbying Government in order to promote self interest.

In my opinion, no longer a business model based on honesty/integrity.

Just takes a while for that fact to sink in.
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BMO Nesbitt RRSP Foreign Currency Class Action Lawsuit

Postby urquhart » Wed Aug 09, 2006 11:07 am

The details of this class action lawsuit are at:
www.rrspclassaction.com

This case is relevant since it alleges that a Canadian bank-owned dealer failed to act in the interests of its RRSP, RRIF and RESP investing clients. The bank is alleged to have completed unnecessary foreign currency conversions into and out of Canadian dollars. Hidden fees of 3% plus were charged on reinvestment of sale proceeds, dividends and interest into securities of the same foreign currency. Foreign to Canadian currency and Canadian to foreign currency conversions were being done even where there was immediate reinvestment into a foreign security into another foreign security of the same foreign currency. The RRSP, RRIF and RESP investing clients are alleged not to have been informed and did not give approval for these foreign currency transactions.

CASE SUMMARY

This proposed class action was commenced on August 2, 2006. It is brought by James R. MacDonald on behalf of a class of individuals against BMO Nesbitt Burns Inc., BMO Trust Company and BMO Bank of Montreal in respect of foreign exchange transactions in RRSP, RRIF and RESP accounts.

The proposed class includes all present and former clients of the defendants who held or hold RRSP(s), RRIF(s) or RESP(s) and who, since June 14, 2001, have incurred foreign currency conversion charges in these accounts.

The statement of claim alleges that the defendants have systematically converted foreign currency in these accounts to Canadian currency without instructions from the customers, and without there being any need to do so, based upon revisions to the Income Tax Act which came into effect on June 14, 2001. Also, in effecting all currency conversions, the defendants levy an undisclosed conversion fee in addition to the amount that they actually pay to buy or sell currency. The claim alleges that the defendants failed to change their operational practices after the June 14, 2001 change to the Income Tax Act which allows RRSPs, RRIFs and RESPs to hold foreign currency as an investment, and further alleges that the reason for the defendants’ failure to effect a change was so that they could continue to earn profits from the foreign exchange fees, at the expense of the class members.

The claim seeks damages for all the fees charged in association with the unauthorized conversion of foreign currency to Canadian funds during the claim period. It also seeks repayment of all the hidden foreign exchange fees levied by the defendants on transactions where the customer did authorize a conversion of funds from Canadian to a foreign currency; but had no notice and did not agree to payment of the hidden fee. Each time a foreign exchange fee is charged by the defendants it depletes the funds in the customer’s retirement or education fund.
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Postby admin » Fri Feb 17, 2006 10:57 am

I still find it interesting to hear the critics of investor advocates, saying that all advocates are "cassandra's" without credibility. They are of the opinion that the investment industry is clean, honest and acts with integrity. I know that is the message the industry sends, but I respectfully disagree and feel it necessary to do so in order to present a balance to the bull.
here is yet another example from an industry that serves itself rather than serving it's clients........................

Merrill Lynch pays $164M US to settle lawsuits
17/02/2006

--------------------------------------------------------------------------------

Merrill Lynch & Co. Inc. says it will pay $164 million US to settle 23 class-action lawsuits related to its research coverage of internet companies during the boom and bust of the dot-com era.


CBC News
In a report filed Friday with the U.S. Securities and Exchange Commission, the investment company said the settlements must still be approved by the courts.

The plaintiffs in 11 of those cases agreed to drop appeals of lower-court settlements.

Merrill Lynch still has two outstanding class-action lawsuits, and it said it plans to defend them "vigorously."

Merrill Lynch plans will amend its fourth-quarter results to include a $170-million US charge for the cost of the settlements, which will reduce fourth-quarter earnings by 10 cents US per diluted share and full-year 2005 earnings by 11 cents US per diluted share.

Merrill Lynch's stock price ( NYSE:MER ) fell by 98 cents on the New York Stock Exchange to $75.75 US following the announcement.
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Postby Donald » Thu Jan 12, 2006 10:29 am

Frank Marrocco of Gowlings has been appointed a judge of the Ontario Superior Court of Justice.

Who appoints the judges in this town. Many are from Bay Street law firms whereas in the U.S. they tend to come from varying backgrounds, some aren't lawyers. There are public hearings when a judge is appointed in the U.S.

Someone appointed from the sell side is going to project those values in decisions. To suggest they will be more balanced is proven wrong often in the highest court where there are fights to decide who will become supreme court justices. A judge against abortion will generally vote that way. I'm guessing Mr Marrocco's views on small investor advocacy are similar to his colleagues on Bay Street.

The prevailing view among the public is that the judicial system is inaccessible and corrupt.
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Postby Dell » Mon Jan 02, 2006 5:12 pm

Bill 198 will have limited impact on most individuals who still won't have fair access to the courts. The payout cap will make many cases uneconomical it appears. What's interesting is the unrecognized need for individuals to litigate. Many small investors accept losses because there never has been anywhere effective to turn.
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Postby admin » Mon Jan 02, 2006 2:42 pm

New law lets shareholders play hardball
By JANET MCFARLAND

Sunday, January 1, 2006 Posted at 9:13 PM EST

From Monday's Globe and Mail



On New Year's Eve, Windsor lawyer Harvey Strosberg lifted his glass in a toast to a much anticipated new law that will make it far easier for shareholders to sue companies and their executives.
For lawyers like Mr. Strosberg who specialize in class-action lawsuits, Jan. 1 ushered in a new era in Ontario. For the first time, investors will have a legislated legal right to recoup losses that occur when firms make misrepresentations in documents or public comments.

Until this year, the law was so narrowly defined that it could rarely be used. Investors had only a legislated right to sue over misrepresentations in proxy circulars for issues of new securities, excluding most common corporate documents. Now lawsuits can be based on almost any public communication, including inaccurate financial statements, misleading press releases and even misrepresentations in public speeches.

“Jan. 1 is a new year, and we're looking forward to it,” Mr. Strosberg said in a recent interview. “You know that song, ‘She cheated, she lied, she said that she loved me.... Oh what can we do?' Now we know what we can do. We can sue.”

Ontario's legal community is buzzing with anticipation about how Bill 198 will change the landscape for investors and corporations. There is much debate about how the new legal powers will be used, how lawyers will fight the new cases through the court system, and how the courts will treat the unique parts of the legislation.

Here are some of the key questions being pondered by legal experts who are awaiting the first cases in the new year.

Who will use the new powers?

Business lawyer Wes Voorheis, who has represented many large shareholders, believes the initial cases will be launched by plaintiffs' lawyers on behalf of ordinary retail investors.

Although there is a danger that individuals could be forced to pay the other side's huge legal costs if they lose the case, Mr. Voorheis says he is unaware of any situation in which the courts have burdened a non-institutional client with crippling legal costs. As a result, he thinks individuals will leap forward much more quickly than large institutional investors.

With the legislation capping the size of awards, he says the big players will likely wait to see whether there are large enough payouts to cover their losses and justify the huge legal costs.

“If this legislation works — and the jury is still out on that — I think you'll see institutions in Canada gradually stick their noses into this,” he says.

But lawyer Paul Bates, who specializes in business litigation, argues there is no reason to believe Canadian institutions will hesitate to use the new bill. He says some large institutional investors have been willing to sue interlisted Canadian firms in the United States to recover losses, such as Nortel Networks Corp. and Biovail Corp.

“There's no reason to think that institutional investors who proceeded in the U.S. would sit back in Canada,” he says.

Claude Lamoureux, chief executive officer of the giant Ontario Teachers Pension Plan, says Teachers will pick when to launch suits in Ontario and when to continue to sue companies in the United States, depending on the size of its losses and the likelihood of recovering them in Ontario.

“We were very much in favour of this bill. We think it's essential,” he said. “And I don't see why we would not use it.”

How will lawyers launch a case?

There appear to be as many legal strategies as there are lawyers.

Some lawyers say they will launch cases under Bill 198 in tandem with claims using the old system of class-action suits, in which victory is difficult but there are no payout caps. The idea is to try to recover part of the loss under the easier Bill 198 claim, and then try to recover more under the other system.

Mr. Strosberg, for example, says he would not launch a lawsuit under Bill 198 alone. He would start with a claim under the old common law system, alleging negligent or fraudulent misrepresentation, then seek leave to amend the suit to also assert a claim under Bill 198 legislation. The same motion could then be approved as a class action under both systems, he says.

But Mr. Bates thinks investors want quick, targeted lawsuits that will move rapidly through the court system to recoup their losses. To do that, he says, the best strategy is probably a narrowly focused one using Bill 198 alone.

“I think what institutional investors want is fast, focused, efficient recovery of legitimate sums, not one of those scorched-earth, torture-to-death cases that goes on forever,” he says.

Will leave applications become the new battleground?

Under the new legislation, investors must receive permission or leave from the court before they can launch a lawsuit. The provision was added to the act to try to prevent U.S.-style strike suits, which are typically launched in a flurry immediately after a company announces bad news in the hopes of extracting quick settlements.

Lawyers in Ontario are waiting to see whether a typical leave application will entail a quick review by the courts to ensure there is evidence of a reasonable claim, or whether the leave process will turn into a protracted battleground, leading to a mini-trial before the actual trial.

The expectation is that many companies will fight the leave process tooth and nail to try to shut down lawsuits before they begin. Under the gloomiest scenarios, leave applications could wind through the courts for years.

Mr. Voorheis thinks leave applications could be a key battleground because success will be seen as a signal that a judge thinks the case can be won, which will give a plaintiff “tremendous momentum” to insist on a hefty settlement.

“I think what they have there as a precaution to protect companies could well backfire on them,” he says. “Once they get across the threshold, [plaintiffs] are going to say, ‘I'm going to win this case.'”

Why will proving knowledge become so essential?

The liability limits for individuals disappear under Bill 198 if the plaintiffs can prove that they knowingly made a misrepresentation, so many cases will hinge on this critical question.

Mr. Voorheis says many investors will decide whether or not to sue based on whether they think they can recover a significant proportion of their losses, and that will often mean they have to prove knowledge to lift off the liability caps.

“In the absence of knowledge, my guess is that there are not going to be many lawsuits,” he says. “These cases are very quickly going to become about knowledge.”

He says it is not too difficult for lawyers to predict in advance which cases are candidates to prove knowledge because there are typical warning signs. For example, he says if insiders sell a large amount of stock shortly before positive earnings are released, and it turns out they were misrepresented, it suggests someone knew the truth. Similarly, if bad news unfolds shortly after a company issues positive earnings, it can be a red flag that they were knowingly misstated.


Will the new system work?

There appears to be a wide expectation that shareholders will more easily be able to launch successful class-action lawsuits under the new rules. Under the old common law system, class actions rarely succeeded in Canada.

But lawyers have very different opinions about how much shareholders should be celebrating the advent of the new system.

Mr. Voorheis said he doesn't support the principle motivation behind Bill 198, which is structured to ensure that liability is capped, allowing lawsuits to send a message to companies to deter misrepresentations without necessarily ensuring investors recoup all their losses.

“I don't really think that shareholders are going to sue to make issuers behave themselves. They're going to sue because they want to get their losses back,” he says.

But Mr. Strosberg says the new system will open the door for lawsuits that were virtually impossible in the past. He is still fighting to recover even small sums for investors following Canada's most famous fraud case: the failure of Bre-X Minerals Ltd. in 1997.

“We get a lot of calls from people who are investors who want to sue,” he says. “And up until now, you've had to discourage it because there really wasn't the ammunition.”
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Postby Dell » Fri Dec 16, 2005 5:55 pm

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Postby Donald » Fri Dec 16, 2005 10:27 am

Who are these Judges Laskin, Goudge and Blair. What are their ties to Bay Street?
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Postby Dell » Fri Dec 16, 2005 10:15 am

Donald wrote:Does anybody know the name of the judges who overturned the Danier case?

There were three of them: Justice Laskin, Justice Goudge and Justice Blair.
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Postby Donald » Fri Dec 16, 2005 10:00 am

Wojtek Dabrowski, Financial Post
Fri., Dec. 16, 2005
The Ontario Court of Appeal has overturned a ruling in a shareholder lawsuit against Danier Leather Inc., stating that "the action must be dismissed."

The leather clothing manufacturer's shareholders had alleged they suffered losses as a result of misrepresentations by Danier and its executives when its initial public offering closed in May, 1998. The investors had sought at least $10-million in damages.

"We're disappointed," George Glezos, a lawyer for the plaintiffs, said of yesterday's ruling, adding that "we will be bringing an application for leave to appeal to the Supreme Court of Canada."

Danier "is very pleased and feels that ... it's been vindicated," said Alan Lenczner, who represented the company.

Investors alleged that Danier knew by May 20, 1998, it was unlikely to hit its fourth-quarter and annual financial targets for the fiscal year ended June 27 of that year.

Only two weeks after the prospectus closed, Danier issued a "revised forecast" which said revenues would be 27% lower than its original expectation, due to unusually warm weather. Its shares plunged.

However, the rest of June turned out to be cool and the company's results were only slightly below the original forecasts.

Yesterday's 45-page ruling states that the trial judge who heard the case erred in concluding that the company "had a continuing obligation to disclose material facts occurring between the date of its prospectus (May 6, 1998) and the date of closing (May 20, 1998).

"He therefore erred in concluding that because the appellants did not disclose Danier's [fourth-quarter] results to the date of closing, they were liable for prospectus misrepresentation."

The trial judge also erred in law in concluding Danier's prospectus contained the implied representation that the forecast was "objectively reasonable," the ruling states.

Finally, the ruling states the judge erred "in failing to give any deference to the business judgment of Danier's senior management and in failing to take into account that the forecast was substantially achieved. He therefore erred in concluding that the forecast was not objectively reasonable on May 20, 1998, the ruling states.
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Postby Dell » Thu Dec 15, 2005 8:20 pm

"Before yesterday's reversal, the (Danier) case had been celebrated by shareholders' rights advocates in their new grassroots war against corporate misconduct. Last year's trial court decision marked the first time Canadian investors won a class-action based on statements made in a prospectus about a company's financial health." (G&M)

Al Rosen said recently,

"A tiny attempt at correcting this massive oversight has recently been made in Ontario with Bill 198. The parts of the bill dealing with civil liability in the secondary market finally come into effect in 2006, marking the culmination of a decades-long process. The new head of the Ontario Securities Commission, David Wilson, has declared this to be "a milestone in the development of market confidence" and "a cornerstone in economic competitiveness and prosperity." That's either an incredible exaggeration or an admission that nothing of consequence existed in the first place.

Claims that the new securities legislation will greatly help investors who buy stock in the secondary market are far-fetched for several reasons. For most cases, the prescribed limits on penalties will be less than the cost of launching a lawsuit for recovery. For more serious cases, investors must prove the existence of recklessness or willful blindness. In fact, many class-action lawyers see the new law as nothing significant from an investor perspective." (NP)
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Re: Danier suit overturned

Postby Donald » Thu Dec 15, 2005 6:51 pm

Donald wrote:In a major setback for disgruntled shareholders, the Ontario Court of Appeal has overturned a landmark shareholder class-action lawsuit against Danier Leather Inc., concluding the Toronto-based clothier does not deserve to be penalized for making misleading sales projections as it went public seven years ago.

The precedent-setting decision is being hailed as a huge for corporate officers and directors, who have been increasingly held under the microscope for things they say — or fail to say — that may impinge on a company's share price.
Donald
 
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