Tuesday, November 22, 2005

Oh Canada

Where's a Lead Plaintiff to sue when a Company’s securities are traded on various exchanges located in different countries? Well, if any of it is traded here in the U.S., the investor can try and sue here. But that doesn’t mean the case will actually stay here. You might recall a few months ago, when the Nugget reported on Bayer AG shareholders who were sent packing to Germany because only 8% of the stock was traded on a U.S. exchange. This time, it’s 12% of Canadian based Royal Group Technologies, and you guessed it -- the same result. Judge Harold Baer, Jr. (S.D.N.Y.) held that the action should be brought in Canada, as it is an “adequate alternative forum.”

By the way, if you do plan to try this, you might want to have a Plaintiff who hails from the U.S. of A, as the two Lead Plaintiffs (an individual and the Canadian Commercial Workers Industry Pension Plan) in this action were both “Canadian citizens.” This certainly didn’t help matters, as Judge Baer held that “the named plaintiffs' lack of bona fide connections to this district indicates that their choice of forum should be accorded less deference than that due a resident plaintiff seeking redress.”

You can read In re Royal Group Technologies, issued November 21, 2005, at 2005 U.S. Dist. LEXIS 28688.

Nugget: “While plaintiffs are correct that depositions can be taken abroad pursuant to letters rogatory, live testimony is especially important in a fraud action where the factfinder's evaluation of witnesses' credibility is central to the resolution of the issues.”

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