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Let slip the dogs of war

Section: Daily Dispatches

By Reginald H. Howe
December 19, 2000

Among the frequently asked questions about the gold price fixing
lawsuit are why wasn't it brought as a class action and what are the
chances of getting to discovery.

Many asking the first are past or present gold mining company
shareholders interested in recovering some of their losses.

Those asking the second typically express doubt as to whether these
rich, powerful, and politically well-connected defendants can truly
be called to account in a court of law. In short, they anticipate
that motions to dismiss will be granted even if in law they should
not be.

Only the courts can answer the cynics. All I can say is that if we
were to adopt their position without first making the best effort
possible to vindicate the rule of law, we would never really know
whether they were right or not. So my job is to pursue the litigation
as best I can; GATA's job is to raise funds for the effort and to
publicize the cause.

The case was not brought as a class action for a number of reasons,
some of which relate to certain technical and other requirements
pertaining to this form of lawsuit. In this connection, it cannot be
disregarded that I am a pro-se plaintiff. However, the rules
governing civil litigation in the federal courts allow other parties
to intervene, either as plaintiffs or defendants, if they have a
right or interest that may be affected by the action. Plaintiff-
intervenors are not generally permitted in antitrust cases brought by
the government, but they are often allowed in private civil actions
to enforce the antitrust laws. What is more, a plaintiff-intervenor
may seek in an appropriate case to intervene as a class
representative, and thus to convert the suit to a class action.

Plaintiff-intervenors in a price-fixing case must ordinarily meet the
same test for standing as an original plaintiff. Accordingly, for the
reasons set forth in an earlier memo, shareholders in gold mining
companies would face a distinctly uphill battle in seeking to
intervene. But gold mining companies themselves have a much stronger
basis for intervention, and shareholders should probably direct their
efforts in this direction.

Another obvious category of potential plaintiff-intervenors are other
private shareholders in the Bank for International Settlements.
Indeed, they probably have good grounds for intervention as of right.
Other possible plaintiff-intervenors include people who have dealt or
traded in gold during the pendency of the alleged price-fixing
scheme, or those who are paid or compensated under formulas based on
gold prices.

While intervenors normally come in as plaintiffs or defendants, they
are not confined to the pleadings of the original parties. Rather,
they are free to assert their own claims or defenses as they see fit.
In the present case, for example, other BIS shareholders might well
intervene but take an approach rather different from mine, such as
downplaying or ignoring the gold-price fixing and constitutional
claims and focusing more narrowly on issues of share price valuation.
On the other hand, someone who had traded gold futures or options
would intervene only on the price fixing claims.

Potential plaintiff-intervenors also have the option of starting
their own legal actions. When brought in federal courts, different
actions in essentially the same matter are frequently consolidated
under special provisions for complex and multi-district litigation.
Many plaintiffs, especially in class-action cases, adopt a quite
proprietary attitude toward their lawsuits and resist intrusion by
plaintiff-intervenors. But my inclination is to look more favorably
on this possibility, particularly if a well-funded party with able
counsel presents itself to the court.

Turning to the question of discovery, I am very pleased to report the
formation of a Discovery Committee to assist me in determining
precisely what information to request or search for and to help me
evaluate what is received or uncovered.

The committee consists of James Turk, Michael Bolser, and Adam
Hamilton, none of whom are strangers to readers of The Golden
Sextant, members of, or the gold community in
general. Bill Murphy, Chris Powell, and I are most grateful to this
knowledgeable and intrepid trio for their willingness to help. Their
participation should give comfort to our friends and pause to our