Manitoba Securities Commission settles with Crocus investors

The Crocus saga is yet another step closer to wrapping up. On Monday, the Manitoba government, the Manitoba Securities Commission and PricewaterhouseCoopers announced that they were settling with investors to the combined tune of almost $9 million.

The MSC and the Manitoba government are paying $2.75 million, while PwC is coughing up $6 million. Add these numbers to the $3 million the directors settled for in early January and investors have so far received .40 cents per dollar.

“We’re very pleased,” says Jay Prober, the lawyer representing one of the investors. “Twelve million is a lot of money.”

It’s been reported that the Manitoba government wanted to settle in order to avoid paying another $3 million in legal costs to fight the civil proceeding. The MSC, on the other hand, wanted to end their role in the civil suit in order to proceed with their own case against the fund’s directors.

“The court of appeal felt that there was at least the potential of appearance of bias with the commission being party to the suit as well as holding a hearing,” says Doug Brown, the MSC’s director of legal, registration and enforcement.

Because of the civil case, the court of appeal stayed their action against the directors. “Now we’re looking at taking steps to remove that stay and proceed,” he says.

Brown adds that settling with investors has nothing to do with the MSC’s case against the directors, and that there are no conflicting messages. “It’s really two separate issues,” he says. “The class action lawsuit was looking for damages. The Commission hearing is a regulatory hearing applying principals in a regulatory setting. The consequences and purpose are different.”

While these were the biggest settlements, BMO Nesbitt Burns also settled, but for a much smaller amount — about $100,000 says Prober.

Only Wellington West Capital has yet to settle with investors. It’s been reported that the company wants a quick end to the litigation, but they’re currently not negotiating an out-of-court settlement.

“They haven’t come to the settlement party,” says Prober. “We are proceeding against them.”

Once Wellington West deals with its part on the civil action, the $200-million class action suit that Winnipeg lawyer Paul Walsh launched in 2005 would be essentially finished, though Prober says his client is thinking about pursuing more civil actions against legal advisors Fillmore Riley and business evaluators Stafford Swain. There’s no time frame yet on when the MSC will proceed with its case against Crocus’ directors.

(02/25/08)

Staff

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