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Barrick settles securities fraud lawsuit over hedging

Section: Daily Dispatches

By Joe Schneider
Bloomberg News
Monday, March 16, 2009

Barrick Gold Corp., the world's biggest gold producer, agreed to settle a lawsuit alleging it misled investors by claiming that its hedging program wouldn't hurt profits as gold prices rose.

Terms of the settlement haven't been released because Toronto-based Barrick must conclude talks with its insurers before signing the accord, David Brower, a lawyer for investors who sued, said today in a letter to U.S. District Judge Richard Berman in New York. Berman postponed a settlement hearing, scheduled for tomorrow, until March 31.

Barrick hedged production by entering into contracts to sell some gold before it was mined to protect against a drop in bullion prices. Shareholders alleged in the lawsuit filed in 2003 that the program was "speculative" and "risky," resulting in a drop in the share price as gold prices rose.

Berman allowed that part of the suit to proceed in a ruling on Jan. 31, 2006, when he threw out claims that Barrick was involved in anticompetitive conduct.

Former Barrick Chief Executive Officer Randall Oliphant, Chief Financial Officer Jamie Sokalsky and former Chief Operating Officer John Carrington were named in the suit.

Oliphant was fired in February 2003 after Barrick's stock fell 17 percent in the previous year as the price of gold surged to a six-year high. Oliphant's successor, Greg Wilkins, abandoned the hedging program.

Barrick spokesman Vince Borg declined to immediately comment on the settlement. Brower didn't immediately return a call seeking comment.

The case is Wagner v. Barrick Gold Corp. 03-CV-4302, U.S. District Court, Southern District of New York.

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