Wallin a defendant in $10M settlement
Beleaguered Senator Pamela Wallin, already accused of improperly claiming more than $120,000 in travel expenses on her federal government job, is named as one of the defendants in a multimillion-dollar securities class-action lawsuit recently settled in the United States.
Wallin, at the time a director of now-bankrupt Oilsands Quest Inc., a Colorado corporation with offices in Canada and formerly known as Canwest Petroleum Corp., is one of 10 individual defendants along with the company on the hook for $10.235 million as part of the settlement of the claim dealing with the company’s rights to bitumen in Saskatchewan’s oilsands.
U.S. District Court Judge Jed. S. Rakoff on Aug. 6 ratified the settlement between five named investors and an undisclosed number of others who contributed to Oilsands’ investment program by purchasing common or preferred stock options between Aug. 14, 2006, and July 14, 2009.
In 2011, they filed the class-action lawsuit in the Southern District of New York, claiming they were damaged as a result of their investments.
Rakoff, in his report, said the proposed settlement represented a significant discount from the full damages the plaintiffs claimed to have suffered. But, he added, the case presented considerable obstacles to the plaintiffs’ winning and, equally importantly, collecting on any resulting judgment.
“In context, the proposed settlement amount represents roughly half of what the Canadian monitor has obtained in liquidating all of Oilsands’ remaining assets,” wrote the judge. “The court thus finds the settlement ‘fair, reasonable and adequate.’ ”
According to the settlement reached in March and endorsed by Rakoff, the action brought by the lead plaintiffs on behalf of themselves and others against Oilsands Quest, certain of its former officers and directors, and McDaniel and Associates — the company’s petroleum consultant — “for allegedly issuing materially false and misleading public statements.”
Those statements, the settlement continues, were about: “the value of the company’s mineral rights over more than a million acres of property in Alberta and Saskatchewan; the ability of the company to physically and economically recover oil from its property; and the accuracy of the company’s financial statements.”
“Plaintiffs allege that these purportedly false and misleading statements inflated the price of Oilsands’ stock, resulting in damages to class members when the truth was revealed.”
The defendants denied all of the plaintiffs’ allegations, it said.
Nothing in the 35-page settlement, however, stated exactly what alleged wrongdoings were agreed upon by both sides.
Wallin did not immediately return phone calls and emails this week. Law firms for both sides in the settlement also declined to comment.
Calgary class-action lawyer Clint Docken, who became involved as an agent for the plaintiffs’ counsel in the case, said Wallin and her codefendants will not likely suffer any personal losses as a part of the settlement.
“The insurer will be paying it,” said Docken. “She will not be paying anything out of her pocket. She’s just one of the defendants who has settled.”
Oilsands, according to the statement of claim, obtained mining rights for more than one million acres of property in the two provinces and, at the beginning of the class-action period in March 2006, it traded over the counter on NASDAQ. Beginning on Aug. 18, 2006, it also began trading on the American Stock Exchange.
Rakoff said the settlement provides for each authorized claimant to receive a pro rata share of the net settlement fund based on the amount of his or her allowed claim.
As part of the settlement, the judge ordered reimbursement of $2,814,625 for lead plaintiffs’ attorneys’ fees, plus interest, as well as litigation expenses of $329,914, plus interest, and about $20,000 for costs and expenses.
The settlement, besides Oilsands Quest, Wallin and McDaniel & Associates Consultants Ltd., named Christopher H. Hopkins, T. Murray Wilson, Karim Hirji, Garth Wong, Ronald Phillips, Thomas Milne, Gordon Tallman, William Scott Thompson and John Read as defendants,
Rakoff said the case was complicated by technical issues related to the processes for estimating bitumen reserves and extracting bitumen ore, parallel bankruptcy proceedings filed by Oilsands and its subsidiaries in Alberta, and the need to conduct significant discovery abroad rather than in the United States.