Securities Class Actions – Underwriter Duty Of Care: LBP Holdings V. Hycroft Mining

In LBP Holdings Ltd. v. Hycroft Mining Corporation, 2017 ONSC 6342, the Ontario Superior Court declined to certify a securities class action brought against underwriters¹ on the basis the common law claim of negligence failed to disclose a cause of action and a class proceeding was not the preferable procedure.

What You Need To Know

• This is the first reported Canadian case on the issue of whether underwriters owe investors who purchase securities under a prospectus a common law duty of care. The decision held that underwriters do not owe a general duty of care to prospective investors, either to perform due diligence or to properly price shares.
• The decision also applied the Supreme Court of Canada's 2013 direction² regarding class action certification of common and individual issues, in considering the important issue of whether a lone common law misrepresentation claim against investors should be certified (it should not).