Barrick to pay $24 million to settle fraud
Submitted by cpowell on 10:21AM ET Tuesday, March 17, 2009. Section: Daily Dispatches
By Joe Schneider
Bloomberg News
Tuesday, March 17, 2009
https://www.bloomberg.com/apps/news?pid=20601082&sid=a1Rspdod3FLI&
BarrickGold Corp., the world's biggest gold producer, will pay $24 million tosettle a lawsuit in which investors claimed the company misled them bysaying a hedging program didn't hurt profits as gold prices rose.
Insurersof the Toronto-based company will probably pay most of the settlement,Vince Borg, a Barrick spokesman, said today in a telephone interview inwhich he disclosed the settlement amount. Barrick must concludenegotiations over coverage with the insurers before signing thesettlement agreement, he said.
"There is no admission of liability" in the settlement, Borg said.
Theaccord was made public yesterday. U.S. District Judge Richard Berman inNew York postponed a settlement hearing from today until March 31.
Thesettlement covers investors who bought Barrick stock from Feb. 14 toSept. 26, 2002, when Barrick issued a statement cutting its earningsforecast for the year by a third. The stock fell 11 percent that day.
Barrickhedged its production by entering into contracts to sell some gold atfixed prices before it was mined to protect against a drop in bullionprices. Shareholders claimed in the lawsuit filed in 2003 that theprogram was speculative and risky, resulting in a drop in the share price as gold prices rose.
"Itis clear that investors engaged in a selloff of Barrick stock due, inpart, to defendants' repeated misrepresentations that Barrick's programwould not prevent the company from profiting in a rising gold market,"the plaintiffs said in their complaint.
Berman allowed thatpart of the suit to proceed in a ruling on Jan. 31, 2006, when he threwout claims that Barrick was involved in anticompetitive conduct.
Former Barrick Chief Executive OfficerRandall Oliphant, Chief Financial Officer Jamie Sokalsky and formerChief Operating Officer John Carrington were named in the suit.
Oliphantwas fired in February 2003 after Barrick's stock fell 17 percent in theprevious year as the price of gold surged to a six-year high.Oliphant's successor, Greg Wilkins, abandoned the hedging program.
David Brower, a lawyer for the investors, didn't return a call seeking comment.
Barrick spent $4.2 million defending the suit through 2007, according to a May 6 regulatory filing, the most recent available.
The case is Wagner v. Barrick Gold Corp. 03-CV-4302, U.S. District Court, Southern District of New York (Manhattan).