In a decision released April 27, 2016 in LBP Holdings Ltd. v. Allied Nevada Gold Corp., Justice Belobaba dismissed a motion by a representative plaintiff to add certain underwriters as defendants to a securities class proceeding. The defendant gold mining company, Allied Nevada, effected a secondary public offering financed as a "bought deal" by two underwriters. The share price collapsed following several subsequent "corrective disclosures." Allied Nevada filed for protection under US bankruptcy law less than a year after the action was commenced, and a motion was then brought to add the underwriters as defendants on the basis of alleged misrepresentations in the offering short form prospectus.
In dismissing the motion, Belobaba J. interpreted the Ontario Securities Act (the "Act") and held that i) while the underwriters could be sued under the Act with respect to misstatements in a prospectus, the primary market statutory claim was time-barred, and ii) the underwriters were not "experts" so as to fit them under the definitions of prescribed defendants under the Act's secondary market statutory cause of action.