National Bank of Canada (TSX:NA) faces a possible class action suit over its role as underwriter for Poseidon Concepts Corp. (TSX:PSN) The firm’s share price tanked after it revealed its revenues were overstated in recent quarters.
Class action firm Siskinds LLP Wednesday announced that it has filed an application in the Ontario Superior Court of Justice against National Bank seeking leave to commence a secondary market misrepresentation claim under provincial securities legislation. The court has not ruled on the application and the allegations have not been proven.
In the proposed suit, Siskinds is seeking to bring an action in connection with an $82.5 million stock offering in January 2012 in which National Bank Financial Inc. acted as the lead underwriter. The application seeks to represent all investors who acquired securities of Poseidon on or before Feb. 14, and seeks damages of $651 million from the bank and $51 million from the offering’s underwriters.
The Poseidon was cease traded by the Alberta Securities Commission on Feb. 14 on the basis that the company’s first, second and third quarter interim financial reports in 2012 were not prepared in accordance with Alberta securities laws.
“Canada’s banks have a lengthy history of aggressively promoting the securities of upstart issuers in the resource sector. Too often, the banks’ promotional efforts result in handsome profits for the banks, but disaster for investors. Regrettably, the case of Poseidon Concepts is the most recent in a long list of such disasters,” said Dimitri Lascaris, a partner with Siskinds.
The firm notes that proposed class actions are also currently pending in Alberta, Ontario and Quebec against Poseidon and certain of its current and former officers and directors, too.