Legal Actions against companies or regulators

[Guest]

it looks like the audit of the ASC has allowed a potential class action to be considered by all those people who made complaints to this agency, only to have them not handled properly. At the very least, each file could then be opened as the rightfully should, and examined by qualified experts this time. I myself know of several people whose complaint to the ASC was mishandled.

[Guest]

Sent: Saturday, November 12, 2005 12:57 AM
Subject: Milberg Weiss Announces the Filing of a Class Action Suit Against Wells Fargo & Company and Certain of Its Affiliates on Behalf of Purchasers of Certain Funds


Interesting U.S. case
Assante and a few others in Canada may have similar profiles.

Ken K

http://finanzen.net/news/news_detail.asp?NewsNr=350560

http://www.milbergweiss.com/caseinfo/ca ... aseid=2339

Milberg Weiss Announces the Filing of a Class Action Suit Against Wells Fargo & Company and Certain of Its Affiliates on Behalf of Purchasers of Certain Funds
11.11.2005 23:17:00



NEW YORK, Nov. 11 /PRNewswire/ -- The law firm of Milberg Weiss Bershad & Schulman LLP ("Milberg Weiss") announces that a class action lawsuit was filed on November 4, 2005 against Wells Fargo & Company , and certain of its affiliates, on behalf of all persons who purchased from Wells Fargo Investments, LLC ("Wells Fargo Investments") or H.D. Vest Investment Services, LLC ("H.D. Vest") one or more of the Wells Fargo proprietary funds ("Wells Fargo Funds," as defined below) or non-proprietary funds participating in the Revenue Sharing Program (the "Wells Fargo Preferred Funds" and "H.D. Vest Preferred Funds," as defined below), from June 30, 2000 through June 8, 2005, inclusive (the "Class Period"), seeking to pursue remedies under the Securities Act of 1993 (the "Securities Act"), the Securities Exchange Act of 1934 (the "Exchange Act"), the Investment Company Act of 1940 (the "Investment Company Act"), and state law.

If you purchased any of the Wells Fargo Funds, or Wells Fargo or H.D. Vest Preferred Funds, through a Wells Fargo Investments or H.D. Vest broker between June 30, 2000 and June 8, 2005, inclusive, and sustained damages, you may, no later than January 10, 2006, request that the Court appoint you as lead plaintiff. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as "lead plaintiff." Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. You may retain Milberg Weiss or other counsel of your choice to serve as your counsel in this action.

The action is pending in the United States District Court for the Northern District of California against defendant Wells Fargo and its affiliated entities. A copy of the complaint filed in this action is retrievable from the Court using the case number C-05-4518WHA, or can be viewed on Milberg Weiss's website at: http://www.milbergweiss.com/ .

The "Wells Fargo Preferred Funds" includes mutual funds in the following mutual fund families: Franklin Templeton Investments, Putnam Investments, MFS Investment Management, Fidelity Investments, Evergreen Investments, Alliance Bernstein Investment Research and Management, Van Kampen Investments, AIM Distributors, Inc., Oppenheimer Funds, Inc., Eaton Vance Managed Investments, ING Funds Distributors, LLC, Allianz Global Investors Distributors , LLC, Federated, The Hartford Mutual Funds, Dreyfus Service Corporation, Delaware Investments, Pioneer Investment Management, Inc., Scudder Investments, and Wells Fargo Mutual Funds.

The "H.D. Vest Preferred Funds" includes mutual funds in the following families: Oppenheimer Funds, Putnam Investments, Scudder Investments, MFS Investment Management, Van Kampen Investments, Lincoln Financial Distributors, AIM Investments, Phoenix Investment Partners, John Hancock Funds, Wells Fargo Funds, American Funds, and Franklin Templeton Investments.

The complaint alleges that during the Class Period, defendants served as financial advisors who purportedly provided unbiased and honest investment advice to their clients. Unbeknownst to investors, defendants, in clear contravention of their disclosure obligations and fiduciary responsibilities, failed to properly disclose that they had engaged in a scheme to aggressively push Wells Fargo Investments and H.D. Vest sales personnel to steer clients into purchasing certain Wells Fargo Funds and Wells Fargo and H.D. Vest Preferred Funds (collectively, "Shelf Space Funds") that provided financial incentives and rewards to Wells Fargo and H.D. Vest and their personnel based on sales. The complaint alleges that defendants' undisclosed sales practices created an insurmountable conflict of interest by providing substantial monetary incentives to sell Shelf-Space Funds to their clients, even though such investments were not in the clients' best interest. Wells Fargo Investments and H.D. Vest's failure to disclose the incentives constituted violations of federal securities laws.

The action also includes a subclass of persons who held any shares of Wells Fargo Mutual Funds. The complaint additionally alleges that the investment advisor subsidiary of Wells Fargo, Wells Fargo Funds Management, created further undisclosed material conflicts of interest by entering into revenue sharing agreements with brokers at Wells Fargo Investments and H.D. Vest to push investors into Wells Fargo Funds, regardless of whether such investments were in the investors' best interests. The investment advisors financed these arrangements by illegally charging excessive and improper fees to the fund that should have been invested in the underlying portfolio. In doing so they breached their fiduciary duties to investors under the Investment Company Act and state law and decreased shareholders' investment returns.

The action includes a second subclass of persons who purchased a Wells Fargo Financial Plan that held Wells Fargo Funds. The Wells Fargo Financial Plans include, but are not limited to Full Service Brokerage Accounts, Wells Asset Management accounts, WellsChoice account, and WellsSelect account.

Milberg Weiss (http://www.milbergweiss.com/ ) is a law firm with over 100 lawyers with offices in New York City, Los Angeles, Boca Raton, Delaware, and Washington, D.C. and is active in major litigations pending in federal and state courts throughout the United States. Milberg Weiss has taken a leading role in many important actions on behalf of defrauded investors, consumers, and others for nearly 40 years.

[Guest]

http://www.milbergweiss.com/files/tbl_s ... locked.pdf

go to this web site to see pdf file of the class action filed in the states

pages one and two of the intro are almost a line by line description of what I have been hearing as "standard industry practice" here in Canada.

this will be dually posted in whistleblower forum in case it pertains

[Guest]

"When big corporations are sued, they say they don't adhere to first-class standards but to the lowest common denominator imposed by regulation" –Harold Geller Source: E. Roseman, Advice to advisers: Put it in writing, Toronto Star, Oct. 9, 2005

[jim]

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NORTHERN EXPOSURE:THE LAW OF CLASS ACTIONS IN CANADA– AN OVERVIEW
By: Peter J. PliszkaPartner, Fasken Martineau Fasken Martineau DuMoulin LLP Barristers & Solicitors 66 Wellington Street West Suite 4200, Toronto Dominion Bank Tower Box 20, Toronto-Dominion Centre Toronto, Ontario, Canada M5K 1N6
Phone: 416 868 3336
Fax: 416 364 7813 Email: ppliszka@tor.fasken.com
October 26-28, 2005 ---- Editted to fit - with contact information so as not to violate coyright concerns (if any).
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NORTHERN EXPOSURE: THE LAW OF CLASS ACTIONS IN CANADA – AN OVERVIEW
By: Peter J. Pliszka*

INTRODUCTION “Disasters spawn litigation. Trains collide or derail, planes crash, ships sink,lakes and rivers become polluted, chemical factories explode, ordinary people eat, drink, wear or use unhealthy or defective products. People – sometimeshundreds, even thousands – are injured or killed by these events. When the crisis subsides, some of the victims turn to the courts for redress and compensation. One of the modern mechanisms for dealing with the litigation fallout from majordisasters is the class action.1In Canada, you say? Indeed, these opening comments in a Ontario Court of Appeal decision fiveyears ago accurately reflect the wave, or some might call it the “tsunami”, of class actions which has swept the country over the past decade. Entire books have been written about the rapidly developing law of class actions in Canada. This paper is not intended to be an exhaustive treatise on the law of class actions in Canada.Rather, this paper will provide an overview of some of the legal principles and jurisprudential developments in Canadian class action law.

LEGAL FRAMEWORK FOR CLASS ACTIONS As a result of the federal-provincial division of powers in the Canadian constitution, Canada does not have a national equivalent to Federal Rule 23 of the U.S. Federal Rules of Civil Procedure. Rather, the law of class actions in Canada is provincially-regulated. Prior to the 1990s, only one of Canada’s ten provinces (Quebec) had class action legislation. Since 1992, however, eight of the remaining nine provinces have enacted class action legislation. Further,the Supreme Court of Canada has filled the void in the remaining province with “judge-made” class action law. In Western Canadian Shopping Centres v. Bennett Jones Verchere, theSupreme Court of Canada held that courts in provinces, which have not enacted class action statutes, have residual inherent jurisdiction to design ad hoc processes for permitting a given lawsuit to proceed as a class action.

CLASS ACTIONS – GUIDING OBJECTIVES: The three general objectives which class action legislation in Canada intends to achieve are: •Judicial economy•Access to justice •Behaviour modification

The Supreme Court of Canada recently reaffirmed that these three objectives underlie class action legislation, and the S.C.C. signalled that these three objectives should inform theinterpretation and application of class action legislation, as follows:

First, by aggregating similar individual actions, class actions serve judicial economy by avoiding unnecessary duplication in fact-finding andlegal analysis.

Second, by distributing fixed litigation costs amongst a largenumber of class members, class actions improve access to justice by making economical the prosecution of claims that any one class member would find too costly to prosecute on his or her own.

Third, class actions serve efficiency and justice by ensuring that actual and potential wrongdoers modify their behaviour to take full account of the harm they are causing, or might cause, to the public.

– – –In my view, it is essential therefore that courts not take an overly restrictive approach to the legislation, but rather interpret the Act in a way that gives full effect to the benefits foreseen by the drafters.

CERTIFICATION Similar to class action regimes in the U.S., a legal action in Canada may not progress as a class proceeding without approval – i.e. certification – of the court. The test for certification of a class action is generally consistent across the various provincial regimes, and requires the representative plaintiff to establish the following five elements:

1. The pleading discloses a cause of action;
2. There is an identifiable class of two or more persons;
3. The claims (or defences) of the class members raise common issues; 4. The class proceeding would be the preferable procedure for the resolution of the common issues; and
5. There is a representative plaintiff who (a) would fairly and adequately represent the interests of the class, (b) has produced a workable plan for advancing the proceeding as a class action and (c) does not have an interest which might conflict with that of other class members.

With respect to numerosity, the Canadian test for certification does not require that the class be a large number of individuals, nor does it require the representative plaintiff to determine the number of the proposed class members at certification. This criterion requires only that there bean identifiable class of “two or more” persons.

With respect to typicality, the representative plaintiff is not required to be “typical” of the class members in respect of all issues. However, Canadian courts have held that there must be a representative plaintiff who has a valid cause of action against each defendant named in thepleading.

With respect to predominance, the Canadian test for certification does not require that the common issues “predominate” over the individual issues. The certification test in Canada contemplates that there will likely be a mixture of common issues and individual issues, and the test simply requires that the claim raises one or more common issues. In analyzing the common issue requirement, generally the court will consider “whether allowing the suit to proceed as arepresentative one will avoid duplication of fact finding or legal analysis.”

An issue will be “common” where its resolution is necessary to the resolution of each class member’s claim, but it is not essential that the class members be identically situated vis-à-vis the defendant or that resolution of the common issue would be dispositive of each class member’s claim. Essentially, if the resolution of the common issue would advance the litigation to a legally material extent, this requirement will likely be met (even if it leaves individual issues to be litigated insubsequent separate proceedings).

PREFERABLE PROCEDURE: Frequently, the ultimate battleground on a certification motion in Canada revolves around the preferable procedure criterion. The question is whether a class proceeding is the preferable procedure for resolving the common issues. The Ontario Superior Court in Carom v. Bre-X summarized the approach to be taken by the court in considering this criterion as follows:

The proper approach to be taken in considering whether a class proceeding is the preferable procedure for resolving the common issues is to have regard to all ofthe individual and common issues arising from the claims in the context of a factual matrix. A class proceeding is the preferable procedure where it presents a fair, efficient and manageable method of determining common issues which arise from the claims of multiple plaintiffs and where such determination will advance the proceeding in accordance with the goals of judicial economy, access to justice and the modification of the behaviour of wrongdoers.

In practice, there is a de facto onus on the party opposing certification on this ground to present a concrete alternative procedure to a class proceeding for resolving the common issues of the class members. Defendants often seek to identify alternative dispute resolution procedures that may apply to the claims (e.g. procedures prescribed by an applicable statute). Moreover, in some recent mass tort cases, defendants have sought to develop their own compensation systems or procedures in response to a given tortious event, and have urged the court to reject certification of the class action on the basis that their own proposed procedures for resolving the claimants’ claims is preferable to a class action. Such efforts have met with varying degrees of success.

CROSS-BORDER CLASS ACTIONS: The recent years have seen a flurry of Canada-U.S. “cross-border” class actions. Generally, cross-border class actions take one of two forms: (1) “copy cat” class actions, and (2) international classes.

QUEBEC – PLAINTIFFS’ NIRVANA? Of all the provinces of Canada, “la belle province” has the longest history with class action legislation. Quebec enacted class action legislation in 1978, 14 years before the next province(Ontario) enacted its Class Proceedings Act. January, 2003 marked a significant turning point for class actions in Quebec, and by extensionfor Canada as a whole. In 2003, the Quebec government enacted certain amendments to the rules governing class actions in Quebec which tilted the playing field distinctly in favour ofplaintiffs on certification motions.

Briefly, the major changes are: •Defendants no longer have the right to cross-examine the representative plaintiff on a certification motion. •Defendants no longer have the right to file written evidence on the certification motion. • Allegations contained in the originating pleading are to be accepted by the court as true for the purpose of a certification motion, with the consequence that now there usually is no deponent for the plaintiff class whom the defendant may seek to cross-examine to test the veracity of the allegations. The rules prohibit the defendants from filing written material. Instead, the defendant is limited to contesting the certification motionorally at the hearing of the certification motion.

However, the defendant does not have an absolute right to adduce oral evidence at the hearing of the certification motion. Rather, the new rules provide that the judge “may allow evidence to be submitted”. As a result, the defendant may not know until the actual hearing of the certification motion whether it will be granted leave to call witnesses to provide oral evidence in support ofthe defendant’s opposition to certification.

As such, the certification motion is only a preliminary step towards the formulation of the class action.

IMPLICATIONS OF THE PIRO DECISION The Piro decision has created a “brave new world” for defendants in Quebec. The new certification rules have turned Quebec into the most plaintiff-friendly class action regime in Canada. Unlike the certification process in most provinces, Quebec’s certification process now deprives defendants of fundamental procedural safeguards, and does not allow for substantial evidentiary discovery or substantive adjudication of issues.

Consequently, the plaintiffs’ bar in Canada is beginning to commence initially in Quebec more and more class actions which are ultimately intended to become national in nature.

CONCLUSION: Canada is awash in class actions. Given Canada’s still-relatively short history with class actions, the law is in a dynamic state of development. This provides ongoing challenges for corporations and their counsel. By the same token, however,the fluid nature of our law presents opportunities for defendant corporations, whose in counsel and outside litigation counsel are limited only by the extent of their creativity in devisingeffective counter-arguments and defences to stem the class action tide.

[Donald]

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.

[Donald]

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.

[Dell]

"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)

[Donald]

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.

[Dell]

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.

[Donald]

Who are these Judges Laskin, Goudge and Blair. What are their ties to Bay Street?

[Dell]

Justices John Laskin, Stephen Goudge and Robert Blair worked on Bay Street.

http://www.ontariocourts.on.ca/court_of ... laskin.htm

http://www.ontariocourts.on.ca/court_of ... goudge.htm

http://www.ontariocourts.on.ca/court_of ... /blair.htm

[admin]

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.”

[Dell]

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.

[Donald]

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.