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Member, Beacon International Group, Ltd.
LONDON, Ontario--The first class action lawsuits under Ontario's amended securities legislation have been filed against IMAX Corp.
The lawsuits allege the Mississauga, Ontario-based entertainment technology company and theater owner misrepresented its 2005 earnings and its disclosure that the U.S. Securities and Exchange Commission had started an informal inquiry into the alleged misrepresentations led to a 40% decline in the company's stock value.
The lawsuits were filed under the amended provisions of Ontario securities legislation known as Bill 198, which imposes civil liability for inaccurate or incomplete corporate disclosure in the secondary market. The amended law allows secondary-market investors to seek compensation for damages suffered if the issuer or responsible individuals made a written or oral public disclosure that contained an untrue statement of a material fact or failed to make a timely disclosure (BI, Nov. 14, 2005, Feb. 6, 2006).
One lawsuit filed by London, Ontario-based Siskinds L.L.P. alleges that a Feb. 17 press release issued by IMAX was materially false and misleading because of the company's statement that it expected to meet or exceed 2005 earnings based on the inclusion of revenues from 10 theaters that were not scheduled to open until 2006. On that day, IMAX's stock price rose 9% and increased by 19% over the next few weeks, according to the lawsuit, which was filed in and is seeking certification from the Ontario Superior Court of Justice in London.
The lawsuit seeks compensatory damages for negligence and negligent misrepresentation in the amount of $500 million Canadian ($446.8 million) and punitive damages of $100 million Canadian ($89.4 million).
A separate lawsuit seeking class action status filed by Windsor, Ontario-based Sutts Strosberg L.L.P. also alleges earnings misrepresentation and requests $200 million Canadian ($178.7 million) in damages.
IMAX officials could not be immediately reached for comment.