NEW YORK (May 31, 2016) – Labaton Sucharow LLP is pleased to announce that a $140 million settlement has been reached in a case alleging Barrick Gold Corporation (Barrick), one of the largest global gold mining companies, violated federal securities fraud laws when the company knowingly and repeatedly misled investors about its compliance with environmental regulations in its flagship $8.5 billion South American mining project in In re Barrick Gold Securities Litigation, No. 13-cv-03581 (S.D.N.Y.).
Labaton Sucharow partners Jonathan Gardner and Serena Hallowell led the Firm’s team, which served as liaison counsel, and included associates Christine M. Fox and Alec T. Coquin. The team’s work was instrumental to the case’s success, particularly the development of all of the confidential witnesses which led to valuable information.
Barrick first announced the Pascua-Lama gold mining project, located in the Andes mountains, in 2008 as an effort to pull the company out of declining production levels it was experiencing in older mines. Touted to investors as a “flagship” project and a “top priority,” Barrick further described Pascua-Lama as “low-cost” with a “very effective risk management program.”
In June 2012, investors began to learn the truth about Barrick’s Pascua-Lama project. The plaintiffs allege Barrick knowingly concealed: 1) the true costs and timeline for constructing the Pascua-Lama mine; 2) the company’s violation of its environmental obligations related to the mine; and 3) control deficiencies at Pascua-Lama that manifested in an undisclosed material weakness in Barrick's internal controls. Specifically, the plaintiffs claim the company covered up that the original publicly disclosed Pascua-Lama budget and timeline shared with investors was actually infeasible and unachievable from the start. Barrick further hid deficiencies in controls, resulting in 1) unreliable and unachievable cost and timeline updates; 2) persistent environmental commitment violations; and 3) a material weakness in Barrick's internal controls resulting in the company’s inability to accurately report the costs and timeline for Pascua-Lama or assess the project's deficiencies.
These revelations led to Barrick releasing several announcements over the following year and a half regarding cost increases, delays in production, and suspension of construction due to ongoing environmental regulatory issues. The fallout led Barrick’s stock price to fall nearly 43 percent from June 2012 to November 2013.