The shareholders’ settlement with Vancouver-based Southwestern Resources Corp. for $15.5 million, previously discussed here, is a landmark according to the lawyer for the class because it is the first major securities class action settlement to occur following changes to the Ontario Securities Act that were introduced at the end of 2005. According to an article in the Financial Post, the changes to the law gave investors the right to sue companies for false or misleading statements, and no longer required them to prove they relied on misrepresentations from the company when they bought the stock.
Dimitri Lascaris of Siskinds LLP, lead attorney for the class, stated that he didn’t “know that a settlement of this nature could have been achieved so quickly and to the same degree if we didn’t have the legislation in place. I think this proves that the legislation is doing good things for investors.”
Also notable is the fact that roughly half of the $15.5 million will come not from the company but from former CEO John Paterson and his wife, Margaret Joan Paterson. David Black, Southwestern’s chairman, stated in the article that “[t]he class-action people sued Southwestern and John Paterson, who was the wrongdoer. As a company, we turned around and sued John Paterson for breach of duty and fraud. So we essentially did a lot of their work.”