Bre-X defence lawyer faces disciplinary hearing

Mr. Groia, 56, criticized in previous court judgments for using “petulant invective” and “guerillia theatre” in the Bre-X trial, faces anything from a reprimand to the revocation of his licence if a three-member Law Society panel finds he violated the profession’s rules.

For his part, Groia accuses the Ontario Securities Commission, the regulator that was prosecuting his client, former Bre-X geologist John Felderhof, of not providing proper documenation, and of not giving proper notice to his client that it was laying charges of insider trading and issuing misleading press releases.

Bre-X Minerals Ltd. was a Canadian junior gold explorer responsible for a major mining fraud scandal in the early 1990s. When the Calgary-based company reported it was sitting on a major gold discovery in Busang, Indonesia, the penny stock soared to $286. 50 on the TSX. At its highest point, Bre-X had a market capitalization of some $6 billion, according to Wikipedia. The shares became worthless and the company collapsed when it was discovered that the core samples had been “salted” to appear to contain more gold.

The Bre-X scandal became the most notorious mining fraud in Canada and led to the National Instrument 43-101 mineral resoure classification system — a set of rules and guidelines for reporting and displaying information about exploration properties for companies that report these results on Canadian stock exchanges.  One of the key tenets of NI 43-101 is that the report, which includes drill results, must be prepared and signed off by an  independent third party, known as a Qualified Person. The equivalent process in Australia, for companies that trade on the ASX, is the Joint Ore Reserves Committee Code (JORC Code).