By Richard Neil Kennedy
We missed you last week, but we are back with another round of Friday Finds on the CBLB! Some of the news stories dominating the headlines these past two weeks include developments in the class action against Barrick Gold, new investment tools offered by the British Columbia Securities Commission, and further developments regarding WeWork.
In class action news, the Ontario Superior Court has recently granted a motion of leave in the ongoing class action against Barrick Gold, the second largest bullion miner in the world. This motion allows the class action to proceed. A leave motion is only granted when a court is “satisfied that the class action is brought in good faith and there is a reasonable possibility that the action will be resolved at trial in favour of the plaintiff”. The motion did, however, deny motion to leave for debt holders of Barrick Gold and only approved the motion for those who held common shares. The class action is based on misrepresentation by Barrick Gold in 2012 regarding a construction of gold mines in Chile and Argentina and stands to be one of the largest class actions in Canada. This is not the only bad news for Barrick Gold as they recently missed their third-quarter estimate for gold production. A class action for similar misrepresentation has already been settled in the United States and so it will be interesting to see whether the Canadian class action also settles.
In educational news, the British Columbia Securities Commission (BCSC) has recently released an online toolkit to help people learn more about investing and learn about how to protect themselves. The toolkit provides short, mobile-friendly videos that go through basic investment instruments, the questions one should ask themselves before investing, and how to choose an investment professional. It also lays out some common forms of fraud in the market and how investors can protect themselves from them. While anyone can access the toolkit, the BCSC stated that it made the program specifically for millennials because their research highlighted that millennials are less knowledgeable of the investing industry and are unsure of where to find accurate, reliable information compared to older generations. Given the increased accessibility of investing and the limitless amount of investing information on multi-media platforms such as Youtube, this resource provides some fundamental information for beginners. This move to enhance the financial literacy of the general public is surely a positive development.
In banking news, a consortium of international banks such as Bank of America, Deutche Bank, Goldman Sachs, and others have recently announced a plan to develop a new communications platform. This platform, called DirectBooks, is intended to increase the efficiency and accuracy of how these banks communicate with one another. This enhanced communication is intended to streamline the underwriting business and, specifically, bridge the communication gap between underwriters and investors. While no Canadian bank partook in the creation of the platform, it would not be surprising to see them eventually adopt the platform if it is found to actually produce the benefits it is alleging.
In international news, the world’s largest oil company, Saudi Aramco, is planning on listing up to 5% of its shares on the Tadawul, a stock exchange in Riyadh, Saudi Arabia. The oil giant, which is valued at around $2 trillion (although some suggest the value is closer to $1.1 trillion) and made around $111 billion in net income in 2018, is attempting to attract foreign investors. The oil giant is working hard to ensure that foreign investors will not be given the short-end of the stick when it comes to sharing of the profits or dividends of the corporations. There is also concerns that the Tadawul lacks liquidity required for such an offering and a lack of legal liabilities. Whether any Canadian investor will be able to acquire these shares, or if they ever actually do go public, will surely be an interesting story to follow.
Catching up with WeWork developments, it is alleged that the company is weighing two financial rescue plans. After the ouster of its CEO and its failed initial public offering that we covered, the corporation is contemplating ways to keep the lights on. One of the plans is allegedly offered by Japan’s SoftBank, a bank that has already invested billions of dollars into WeWork, and another plan by JPMorgan Chase. If SoftBank plan is accepted, the bank will essentially take control of the company while JPMorgan’s plan would raise billions of dollars of debt. At the time of writing, it is unsure which plan WeWork is likely to take, if either, and whether some combination of the deals is possible. Again, WeWork appears to be an example of how quickly a fruitful-looking future of a company can swiftly change. We will be following along to see what happens to WeWork.
That wraps up this week of Friday Finds! Thanks for joining us and be sure to check back next week for another round-up of the top business and securities law news stories.