The court found the $1 million settlement fair and reasonable
The Ontario Superior Court of Justice has approved a settlement agreement in a securities class action, paving the way for the resolution of claims against multiple defendants involved in alleged securities misrepresentations.
In Przybylska v. Gatos Silver, Inc., 2024 ONSC 2196, the court approved a $1,000,000 settlement with Tetra Tech and its two employees, concluding a segment of the litigation surrounding inaccuracies in mineral reserve statements reported by Gatos Silver, Inc.
The plaintiff initiated the action after discovering that Gatos Silver, a reporting issuer, had materially overstated the mineral reserves of its primary mine. Tetra Tech is a provider of consulting and engineering services that prepared the technical report in which the alleged overstated mineral reserve was presented. The Statement of Claim alleges that the overstated mineral reserve in the technical report was incorporated in Gatos’s offering and continuous disclosure documents released throughout the class period, leading to significant financial losses for investors.
The settlement, reached after arm's length negotiations and thorough examination by class counsel and a geology expert, was deemed fair, reasonable, and in the best interests of the class members by the court. This decision came early in the legal process, supported by disclosure from the defendants, which helped accurately assess the claim's merits.
The Superior Court’s approval was based on the principle that while settlements need not be perfect, they must fairly address the interests of all class members. This settlement provides immediate compensation to class members, which the court found to be an important consideration given the potential for prolonged litigation and the uncertainties of trial outcomes.
Simultaneously, the court is processing the preliminary steps for a proposed $3,000,000 settlement with the remaining defendants, including Gatos Silver and affiliated entities from The Electrum Group. This next phase involves the court granting leave for the plaintiff to proceed under section 138.8 of the Securities Act against these defendants, addressing claims of misrepresentation in the secondary market.
The court endorsed several preliminary orders as part of the preparatory steps for the upcoming Gatos settlement. These include discontinuing certain common law claims, certifying the action for settlement purposes, and appointing RicePoint Administration Inc. as the administrator of the settlement proceeds. Additionally, the court approved a comprehensive notice plan to inform class members about the settlement details and their rights, including how to file claims and object to the settlement terms.
In approving the settlement, the court emphasized timely compensation for affected investors while ensuring procedural fairness and thorough judicial oversight. The final approval of the Gatos settlement is scheduled to be considered in two months.
