WINDSOR, Ont. (CP) _ Two new Canadian shareholder class-action lawsuits have been launched against Imax Corp. (TSX:IMX), alleging the big-screen film company misrepresented revenue and earnings, two weeks after a similar suit was launched in the United States.
Sutts, Strosberg LLP, a Windsor-based law firm, said it launched a suit in the Ontario Superior Court of Justice on behalf of lead plaintiff Neil Silver of Windsor and representing people who purchased Imax stock between March 9 and Aug. 9.
Toronto-based Siskinds LLP said it will file a class-action lawsuit Wednesday against the company, claiming $500 million in damages and an additional $100 million in punitive damages. The Siskinds suit, which did not name a lead plaintiff, will name the company, Imax co-chairman and co-CEO Richard Gelfond, co-CEO Bradley Wechsler and former chief financial officer Francis Joyce, the law firm said late Tuesday.
The Siskinds suit will also be seeking leave under new Ontario legislation, Bill 198, which gives investors the right to sue public companies that operate in the province’s capital markets for misleading disclosure and failure to make timely disclosure.
However, the law firm, which has an affiliation with Siskinds Desmeules in Quebec City, is also seeking Imax investors in that province. A similar lawsuit was filed Aug. 22 by Pennsylvania-based law firm Chimicles & Tikellis LLP.
All three suits make similar allegations: that in the fourth quarter of last year, the company recognized revenue from Imax screens that were not yet opened. None of those claims have been proven in court.
Earlier in August, the company became the focus of an informal accounting probe by the U.S. Securities and Exchange Commission for revenues during the same quarter the lawsuits target.
A day after Imax reported the investigation, its shares dropped 40 per cent to $5.73 US on the Nasdaq.
The company is responding to a similar inquiry by the Ontario Securities Commission.
"If the allegations are proven, Imax will be held accountable by its shareholders," Harvey Strosberg, lead counsel of the Canadian suit, said in a statement.
Siskinds lawyer Charles Wright said Bill 198 was intended to protect investors from "exactly this kind of situation.
"Investors made decisions based on the information that the company provided and ended up seeing a significant decline in the value of their investment," he said in a release.
"A number of investors were hurt very badly."
Lawsuits against Imax have also filed in the United States District Court for the Southern District of New York and other lawyers have said they are looking into the case.
A spokeswoman for Imax said the company hasn’t been served with the Sutts suit but added "from what we’ve seen it’s likely the same baseless allegations as the other lawsuits."
Shares in Imax closed up a penny at $5.15 on the Toronto Stock