Securities class action filed against Silver Wheaton Corporation

Silver Wheaton Corporation Securities Class Action


A securities class action lawsuit has been filed against a precious metals streaming company for violations of federal securities laws after allegedly misleading investors.

The class action complaint was filed against Silver Wheaton Corporation in the U.S. District Court for the Central District of California on behalf of investors who bought shares in the company during the class period between March 30, 2011 and July 6, 2015. The firm is involved in precious metals streaming. Silver Wheaton offers upfront payments for by-product from mines, not owned by the company, that produce silver and gold. Silver Wheaton purchases these by-products at fixed prices, usually between $4 and $6 per ounce of silver, and around $400 per ounce of gold. The fixed costs are meant to  help protect investors, while allowing the company to make the most of precious metals price increases.

Silver Wheaton purchases silver and gold by-product from mines it does not own, a process called streaming.

Silver Wheaton accused of misrepresentations on financial statements
The securities class action suit against the precious metals streaming company alleges that it made false or misleading statements in violation of the Securities Exchange Act of 1934. The complaint alleges that the company failed to disclose that its financial statements had errors concerning income tax owed on profit generated via foreign subsidiaries. The claim states that Silver Wheaton officials issued annual reports, SEC filings and other statements that failed to disclose material adverse information and misrepresented the truth about the company’s finances.

The reports, the lawsuit alleges, were designed to influence the market in favor of Silver Wheaton’s securities, and artificially inflate the price of shares in the company. The complaint also notes that the company lacked adequate management over its financial reporting.


Silver Wheaton Corporation Securities Class Action


Taxable income changes drive share prices down
Silver Wheaton issued a press release on July 6, 2015, announcing that the Canadian Revenue Agency had proposed reassessing Silver Wheaton under Canada’s Income Tax Act. The CRA decided that the company’s taxable income should be increased by around $567 million for the years 2005 to 2010 for income generated by its foreign subsidiaries. Silver Wheaton estimated that as a result of the changes, it would owe around $150 million in taxes, as well as about $7 million in transfer pricing penalties and other interest and penalties not yet known.

On news of the increased estimated taxes, stock in the company fell $2.08 per share, or about 12 percent, to close at $15.46 per share on July 7, 2015.

For more information on this case or other class action litigations, please contact Kevin Doyle, Senior Vice President, at 203-987-4949 or info@battea.com.