LETTERS TO THE EDITOR — Judge addresses material change

In your article “Judge finds in Seabright’s favor” (T.N.M., Apr. 5/93), you say that “a peculiar one-sided situation may be created by which optimistic estimates are quickly publicized, yet later pessimistic forecasts can apparently be withheld at management’s discretion.” When he made his decision, Justice Nunn addressed this very question (pages 237, 238); however, the text of his decision does not support your report.

Justice Nunn, in his discussion on material change, states that “in order to give proper effect to the policy, a determination of materiality must be based upon a reasonable expectation that the price of the stock would undergo a significant change. In this situation with Seabright, the matter of grade and ore reserves are facts but so also is the information on which they are based and, starting from that information provided by consultants, the facts of grade and ore reserves become material facts when the company is satisfied after performing the necessary work, in this case, as recommended by the consultants, as to the accuracy of the fact and that that it is significantly different from earlier facts as to cause a significant change in the market price of the stock.”

In the preceding paragraph, Justice Nunn argues that “the market . . . would be open to unresolvable and myriad claims of manipulation” if the intention of material change policy was immediate release of facts.

Patrick Hannon

President

MineTech International

Halifax, N.S.