US/CANADA - Pension plans have begun to extend shareholder action beyond the US by using Canadian courts in their bid to protect the rights of beneficiaries.
The pension funds, which have both held shares in Nortel, are seeking to sue the accountancy firm for breach of contract, negligence, negligent misrepresentation and/or breach of fiduciary duty.
Dimitri Lascaris, lawyer at Siskinds LLP, acting on behalf of the pension funds, said while activism had been commonplace in the US courts, it was a relatively new phenomenon in the Canadian courts.
He said: "They have decided to access Canadian courts to protect the integrity of North America's highly integrated capital markets.
"They view the role of gatekeepers as being absolutely essential to the preservation of market integrity."
In a statement, Deloitte said it was inappropriate to comment on the case as the SEC and OSC had laid charges against a number of former Nortel executives. Nortel also declined to comment.
Lascaris said there had been other recent instances where the Canadian courts had been used in shareholder activism.
Last year, the Ironworkers Ontario Pension Fund filed a derivative proceeding against certain directors and officers of Research in Motion (RIM).
The case was settled in the latter half of 2007. Lascaris said: "The co-CEOs of RIM agreed to reimburse RIM for certain expenses incurred with the investigation of their stock option practices.
"The board of RIM also agreed to adopt various corporate governance reforms, including a prohibition on giving RIM stock options to its independent directors."
Saskinds and the Canadian law firm Cavalluzzo Hayes Shilton & McIntyre acted as counsel.
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