(December 13, 2018). Since January 31, 2017, Colt Resources, Inc.’s (“Colt”) securities have not traded and the Company has intentionally avoided its continuous disclosure obligations. Indeed, its investors have been in the dark only learning of material facts concerning Colt’s assets being abandoned, forfeited, lost, and sold.
Prior to going to trial the plaintiff investor (a/k/a, representative investor) must obtain leave to proceed to trial from the judge. This requires the investor to evidence with a reasonable possibility of success, which is materially less than 51% chance, that the claim is brought in good-faith and he/she will succeed at the civil trial, e.g., which requires that the evidence proves on a balance of probabilities or 51% or more that the company’s document(s) contains a misrepresentation. A misrepresentation is defined as an untrue fact or omitted fact that would significantly alter the total mix of information to the reasonable investor reading that particular document(s) released by the corporation.
On December 13, 2018, Morganti & Co. made submissions, on behalf of the representative investors located in Alberta, Ontario, and Germany, that there was a reasonable possibility of success that the investors would be able to prove on a balance of probabilities that Colt (a) failed to release a Material Change Report when it invested substantially all its cash in a foreign start-up mining company; (b) that its subsequent Quarterly Report and news releases contained misrepresentations for omitting the material facts about the investment and that its former CEO did it without the Board’s authority; and (c) rather than correcting these prior statements in a single disclosure Colt sprinkled the bad news over three document released over a two month period. During the hearing and after the investors’ lawyers made their submissions, Colt conceded that it failed to release the Material Change Report and that it released core and non-core documents omitting material facts.
The investors are represented by Andrew Morganti, Albert Pelletier, Hadi Davarinia, and Ian Literovich.