On September 30, 2021, Judge Oetken of the United States District Court for the Southern District of New York granted in part and denied in part a motion to dismiss filed by Kirkland Lake Gold Ltd. (“Kirkland”). The lawsuit alleges that Kirkland unlawfully misled investors by repeatedly claiming that it would not acquire the low-grade, high-cost mining company Detour Gold Corporation (“Detour”). All the while, the two companies actively negotiated a merger, resulting in an agreement to acquire Detour in November 2019.
Judge Oetken sustained plaintiff’s claims under Section 10(b) of the Exchange Act. The Court concluded that plaintiff sufficiently pled that Kirkland misled investors by failing to disclose its potential acquisition of Detour after Kirkland’s CEO Anthony Makuch made public statements that downplayed the possibility of an acquisition, claiming that the company was prioritizing “organic growth.” The Court declined Kirkland’s argument that Mr. Makuch’s statements about growth merely “expressed confidence” for the company and did not technically rule out future acquisitions. Once Mr. Makuch broached the topic of acquisitions, the Court explained, he had a duty to speak “truthfully and completely” to investors by disclosing Kirkland’s ongoing negotiations with Detour.
Lowey Dannenberg commenced this litigation in June 2020. Since then, the case has been consolidated with a separately filed case, alleging substantially the same facts. The case is In re: Kirkland Lake Gold Ltd. Sec. Litig., No. 1:20-CV-04953 (S.D.N.Y.).
The Court’s opinion can be downloaded or viewed below.
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