Initiated By
ROYAL STANDARD MINERALS, INC.
Allegations
IN OCTOBER 2006, I AGREED TO JOIN SEVERAL OTHER SHAREHOLDERS (THE "DISSIDENTS") OF ROYAL STANDARD MINERALS, INC. ("RSM") IN SUBMITTING LETTERS TO RSM MANAGEMENT REQUESTING A SPECIAL SHAREHOLDERS MEETING FOR THE PURPOSE OF ELECTING NEW DIRECTORS. RSM IS A CANADIAN COMPANY, AND MOST OF THE SHARES TRADE IN CANADA. CANADIAN COUNSEL INFORMED THE DISSIDENTS THAT THEY DID NOT NEED TO FILE A SCHEDULE 13-D. RSM SUBSEQUENTLY FILED A LAWSUIT IN THE UNITED STATES DISTRICT COURT, CENTRAL DISTRICT OF CALIFORNIA, CASE NUMBER CV 06-6855 PSG, ALLEGING THAT THE DISSIDENTS WERE A "GROUP," AND HAD BEEN REQUIRED TO FILE A 13-D. THE SUIT SOUGHT TO BLOCK THE DISSIDENTS FROM VOTING THEIR RSM SHARES AT THE ANNUAL MEETING. MOST OF THE DISSIDENTS RESIDE OUTSIDE OF THE UNITED STATES, AND THEY FAILED TO ADEQUATELY COMPLY WITH CERTAIN DISCOVERY ORDERS OF THE COURT. AS A RESULT, ON JUNE 19, 2007, RSM'S REQUEST FOR A PRELIMINARY INJUNCTION WAS GRANTED WITHOUT A HEARING ON THE MERITS. THE INJUNCTION MADE A FINDING THAT THE DISSIDENTS, INCLUDING ME, SHOULD HAVE FILED A 13-D BUT FAILED TO DO SO, AND ENJOINED THE DISSIDENTS FROM VOTING THEIR SHARES AT THE JUNE 26, 2007 ANNUAL RSM SHAREHOLDERS MEETING. I SOLD ALL OF MY SHARES ON NOVEMBER 7, 2006 (THE LETTER TO ROYAL STANDARD WAS DATED OCTOBER 10, 2006) AND I NEVER RECEIVED ANY PROXY VOTING MATERIAL WHICH WAS STATED IN A DECLARATION FILED WITH THE COURT ON JUNE 22, 2007. IN SUPPORTING SOME OF THE OTHER SHAREHOLDERS I HAD NO IDEA I WAS BECOMING PART OF A "GROUP" WITH A REQUIREMENT TO FILE A 13D. MY PERCENTAGE OF OWNERSHIP ONLY AMOUNTED TO APPROXIMATELY 1% OF THE OUTSTANDING SHARES. THE COURT INDICATED, HOWEVER, THAT IT WAS INCLINED TO RESOLVE THE CASE ON THE MERITS, AND WOULD SCHEDULE FURTHER PROCEEDINGS AFTER THE SHAREHOLDER'S MEETING. A STIPULATED FINAL JUDGEMENT WAS FILED ON MAY 15, 2008.
Resolution
Consent
Sanctions
Cease and Desist/Injunction
Sanction Details
UNTIL 2010 DEFENDENTS ARE REQUIRED TO OBTAIN PRIOR APPROVAL FROM RSM IF THEY BUY OR SELL THEIR SHARES UNDER VARIUS CIRCIMSTANCES AND THERE ARE STIPULATIONS FOR VOTING THEIR SHARES. THEY MAY ALSO BE REQUIRED TO SIGN AFFIDAVITS IF REQUESTED BY RSM.
Broker Comment
I SOLD ALL OF MY SHARES ON NOVEMBER 7. 2006 FOR A LOSS, JUST A FEW WEEKS AFTER THE LETTERS WERE SENT TO ROYAL STANDARD AND I THOUGHT THAT WAS THE END OF IT. I NEVER VOTED ANY SHARES. THEN I RECEIVED THE PROPOSED JUDGEMENT AND I WAS BEING ATTACHED TO THIS "GROUP". I WAS CONTACTED PREVIOUSLY ABOUT VOTING MY SHARES AND I AGREED WITH THE THOUGHTS OF THE PERSON WHO CONTACTED ME DUE TO MY OWN OBSERVATIONS ABOUT THE COMPANY AND AGREED TO VOTE MY SHARES ACCORDINGLY. BY SIGNING THE LETTER I DID NOT KNOW I WAS TRIGGERING A 13D REQUIREMENT. I SOLD ALL OF MY SHARES VERY SOON AFTER AND HAD NO MORE DEALINGS WITH THE VOTING ACTIVITY.