An Ontario court has decided to certify a class action to facilitate a settlement between investors and a trio of mutual fund companies stemming from the market timing scandal.

The Ontario Superior Court of Justice had previously denied class certification, although it said that most of the criteria for a class action were met, except that such a suit was not the “preferable procedure” (because the firms had already settled with the Ontario Securities Commission concerning these allegations).

That decision is being appealed, and is due to be heard in November. In the meantime, three of the plaintiffs have signed conditional settlement agreements with three of the fund companies AGF Funds Inc., Franklin Templeton Investments Corp., and IG Investment Management Ltd.

According to the decision, assuming certain conditions are satisfied, under the settlement agreement, AGF will pay $3.5 million, less the amount awarded to lawyers’ fees and disbursements as the costs of implementing the settlement. Similarly, Franklin Templeton will pay $5.0 million less costs, and, IGIM will pay $2.8 million less costs. The funds will be allocated among the firms’ mutual funds.

The court ruled that, in the context of the proposed settlement, all the criterion for certification have now been satisfied; adding that the existence of settlement changes the nature of the preferable procedure analysis.

The other conditions to the settlement include: court approval of the settlement in Ontario; court approval of the settlement in parallel proceedings before the Quebec Superior Court; and the number of opt-outs not exceeding a specified threshold.

IE