In a recent court decision, a class action lawsuit alleging securities fraud against Alio Gold Inc. has been certified. The plaintiff, 0116064 B.C. Ltd., sought certification under the Class Proceedings Act as a multi-jurisdictional class proceeding against Alio Gold Inc.
The plaintiff was a former shareholder of Rye Patch Gold Corp., and its shares were sold to Alio on May 25, 2018, through a plan of arrangement approved by the Supreme Court of British Columbia. The plaintiff alleges that the consideration paid for its shares was affected by false representations made by Alio during the acquisition of Rye Patch.
The alleged misrepresentations were contained in two news releases and an information circular issued in early 2018, related to gold production projections at one of Alio’s gold mines. The plaintiff claims that due to these misrepresentations, it and the proposed class members did not receive fair value for their Rye Patch shares in the arrangement.
This certification decision is the result of a successful appeal of the original certification decision which was dismissed.
Following unsuccessful mediation attempts, the parties were able to agree on many matters, leaving the sole issue for this certification hearing to be whether the reformulated common issues meet the criteria for certification.
The proposed class includes individuals or entities whose Rye Patch shares were acquired by Alio in exchange for Alio shares and cash on or about May 25, 2018, excluding those who sold their Alio shares before August 10, 2018.
The court found that the pleadings disclose a cause of action for common law negligent and fraudulent misrepresentation and certified the case as a class proceeding. 0116064 B.C. Ltd. was appointed as the representative plaintiff for the class.
The certification of this class action lawsuit signifies an essential step in holding Alio Gold Inc. accountable for the alleged securities fraud, providing affected investors an opportunity to seek justice and potential restitution.
