Law firm seeks class action against SNC-Lavalin in connection with charges
SNC Lavalin faces more trouble stemming from shareholders who take issue with the company's delayed disclosure about criminal charges
SNC-Lavalin Group Inc. faces new legal troubles as a shareholder has initiated a class-action lawsuit in connection with the company’s disclosure about the criminal charges against the embattled engineering firm.
Law firm Strosberg Sasso Sutts LLP filed a proposed class-action in Ontario Superior Court on Monday that alleges the company failed to disclose soon enough that federal prosecutors declined to invite it to negotiate a remediation agreement.
The allegations have not been tested in court.
The Montreal-based company is at the centre of a scandal enveloping Ottawa after the Globe and Mail reported the Prime Minister’s Office pressured former attorney general Jody Wilson-Raybould to steer prosecutors to hammer out a remediation agreement that would have averted a criminal trial.
The legal action says the head of the federal prosecution service told SNC-Lavalin on Sept. 4 that she would proceed with fraud and corruption charges stemming from the company’s business in Libya. The company did not inform shareholders until Oct. 10, at which point the share price dropped more than 13 per cent.
“That should have been disclosed to investors,” said lawyer Jay Strosberg, who represents plaintiff John Peters.
Provincial securities law requires publicly held companies “to publicly disclose any material changes” in the business, according to the Ontario Securities Commission.
“Take for example someone who bought shares between Sept. 4 and Oct. 10. If he would have known, maybe he would not have bought the shares. And if the information was disclosed, he would have bought the shares at a lower price,” Strosberg said.
The lawsuit seeks $75 million in damages for shareholders who acquired SNC-Lavalin securities between Sept. 4 and Oct. 10, he said.
SNC-Lavalin declined to comment.
The proposed class-action suit is the second against SNC-Lavalin in three weeks. Earlier this month, shareholder Ruediger Martin Graaf sought authorization from Quebec Superior Court to bring a class-action for what he calls the company’s “false or misleading” statements about its predicament in Saudi Arabia.
SNC chief executive Neil Bruce said in January that ongoing diplomatic tensions between Ottawa and Riyadh were hurting business and forcing the company to consider a possible retreat from the oil-rich state.
The feud, as well problems with a Chilean mining project and an arbitration loss in Australia, prompted the company to cut its financial guidance on Jan. 28, resulting in the second of three drastic drops in the company’s shares since October.