Investors drop proposed class action after shares rebound

A proposed class action over losses suffered by clients of fund manager and exempt market dealer Stableview Asset Management Inc. has been scrapped after the investors’ losses essentially evaporated.

The Ontario Superior Court of Justice granted a motion from the plaintiff in a proposed class action against the receiver for Stableview, its various funds and the firm’s founder, Colin Fisher, seeking to dismiss the action.

According to the decision, the lawsuit initially sought to recover an estimated $7.9 million in damages due to alleged mismanagement of investments.

“The crux of the claim is that the defendants caused the class members’ money to become highly concentrated in debentures issued by Clarocity, a penny stock technology company,” the court noted.

Clarocity was put into receivership in 2019, and was ultimately acquired by another tech company, iLookabout, for shares, warrants, and convertible debentures of iLookabout.

“Under the terms of the transaction, the shares were subject to a standstill agreement, and Stableview’s ability to sell the iLookabout shares was very restricted,” the court noted.

However, since the class action was filed, the iLookabout shares have risen, “such that it is likely that the losses of the plaintiff and putative class members have been made good,” the court noted.

Additionally, the plaintiff determined that Stableview doesn’t have insurance that would cover the claims set out in the lawsuit.

As a result, the plaintiff sought to dismiss the claim without costs.

The court approved the motion, noting that when the claim was filed, it appeared that investors had suffered “substantial losses.” However, they now appear to have suffered no losses.

“There is no utility in continuing the action,” the court concluded.

The Ontario Securities Commission sought a receiver for Stableview in June 2020, and it later filed an enforcement action alleging that the firm (and Fisher) violated securities rules by over concentrating clients’ accounts in Clarocity stock.

None of the allegations have been proven. Fisher has “vigourously denied” the regulators’ allegations, and pledged to defend himself against them.

The next appearance in the OSC proceeding is scheduled for March 8.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.