According to a summary from LexisNexis, plaintiffs, common stock purchasers, filed a class action against defendants, corporation and directors, for alleged violations of § 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. Plaintiffs argued that defendants issued materially false and misleading statements that misrepresented the quantity and quality of gold finds in mining operations, resulting in artificially inflated prices of the corporation's stock, and that defendants allegedly reaped proceeds from the sale of the inflated stock. The parties requested court approval of their proposed settlement--the creation of a settlement fund comprised of shares of common stock and warrants to purchase additional shares of common stock, subject to certain conditions. The court held that class members received adequate notice of the proposed settlement, and that the class was properly certified pursuant to Fed. R. Civ. P. 23(a) and 23(b)(3). The proposed settlement was fair, reasonable, and adequate in light of the facts of the case, complexity, expense, likely duration of litigation, reaction of the class to the settlement, and defendants' inability to withstand a greater judgment. The settlement created a fund comprised of 1.5 million shares of Golden Rule common stock and warrants to purchase three million shares of Golden Rule common stock. Exclusive of the settlement fund, defendants have also provided a fund for the settlement's administrative expenses of up to US$ 250,000. On May 30, 2000, the settlement stock was valued at US$ 0.10 per share and the settlement warrants were valued at US$ 0.03 per warrant.
Furthermore, the court approved the parties' proposed settlement because class members received adequate notice of the proposed settlement, the certification requirements of numerosity, commonality, typicality, and adequacy were satisfied, common questions of law or fact predominated over individual questions, the class action structure was the superior method of managing the case, and the settlement was fair, reasonable, and adequate.
The original complaint alleged that during the Class Period, Golden Rule, its senior executives, and the senior executives of related parties, violated Sections 10 (b) and 20 (a) of the Securities Exchange Act of 1934 by issuing materially false and misleading statements relating to Golden Rule's business operations. Specifically, the Complaint alleges in substance that the defendants misrepresented both the quantity and quality of gold finds in Golden Rule's mining operations in Ghana, which were conducted through the Company's Hixon Gold Resources, Inc. subsidiary.