Supreme Court Widens 'Material Change' Test and Allows Lundin Investor Case to Proceed

Overview

• Writing for the majority, Justice Mahmud Jamal said the lower court erred by using restrictive definitions of change, business, operations and capital, which the legislature left undefined for flexible, contextual application.
• The case stems from Lundin Mining’s 2017 Chile mine rock slide that temporarily halted part of its operations and was disclosed more than a month later, after which the stock fell 16% in a day.
• The decision grants investor Dov Markowich leave to pursue a class action seeking more than $180 million for buyers of Lundin shares between Oct. 25 and Nov. 29, 2017.
• The Court affirmed that material changes must be disclosed without delay under the Securities Act, with a statutory maximum of 10 days for a public statement.
• Legal observers say the ruling heightens litigation and compliance pressure on issuers and could encourage earlier, more expansive disclosures if the plaintiffs ultimately prevail at trial.