Barrick to pay $24 million to settle fraud lawsuit

By Joe Schneider
Bloomberg News
Tuesday, March 17, 2009

http://www.bloomberg.com/apps/news?pid=20601082&sid=a1Rspdod3FLI&

Barrick Gold Corp., the world's biggest gold producer, will pay $24 million to settle a lawsuit in which investors claimed the company misled them by saying a hedging program didn't hurt profits as gold prices rose.

Insurers of the Toronto-based company will probably pay most of the settlement, Vince Borg, a Barrick spokesman, said today in a telephone interview in which he disclosed the settlement amount. Barrick must conclude negotiations over coverage with the insurers before signing the settlement agreement, he said.

"There is no admission of liability" in the settlement, Borg said.

The accord was made public yesterday. U.S. District Judge Richard Berman in New York postponed a settlement hearing from today until March 31.

The settlement covers investors who bought Barrick stock from Feb. 14 to Sept. 26, 2002, when Barrick issued a statement cutting its earnings forecast for the year by a third. The stock fell 11 percent that day.

Barrick hedged its production by entering into contracts to sell some gold at fixed prices before it was mined to protect against a drop in bullion prices. Shareholders claimed in the lawsuit filed in 2003 that the program was speculative and risky, resulting in a drop in the share price as gold prices rose.

"It is clear that investors engaged in a selloff of Barrick stock due, in part, to defendants' repeated misrepresentations that Barrick's program would not prevent the company from profiting in a rising gold market," the plaintiffs said in their complaint.

Berman allowed that part of the suit to proceed in a ruling on Jan. 31, 2006, when he threw out claims that Barrick was involved in anticompetitive conduct.

Former Barrick Chief Executive Officer Randall Oliphant, Chief Financial Officer Jamie Sokalsky and former Chief Operating Officer John Carrington were named in the suit.

Oliphant was fired in February 2003 after Barrick's stock fell 17 percent in the previous year as the price of gold surged to a six-year high. Oliphant's successor, Greg Wilkins, abandoned the hedging program.

David Brower, a lawyer for the investors, didn't return a call seeking comment.

Barrick spent $4.2 million defending the suit through 2007, according to a May 6 regulatory filing, the most recent available.

The case is Wagner v. Barrick Gold Corp. 03-CV-4302, U.S. District Court, Southern District of New York (Manhattan).

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