$600 million class action lawsuit filed against Toronto-based IMAX Corporation

11 September 2006

Siskinds LLP will file a class action lawsuit tomorrow against Toronto-based IMAX Corporation claiming $500 million in damages and an additional $100 million in punitive damages as a result of alleged misrepresentations concerning IMAX's 2005 earnings.

The suit, which will be the first seeking leave under new investor protection legislation Bill 198, will name IMAX Corporation, IMAX Co-Chairman and Co-CEO Richard Gelfond, Co-CEO Bradley Wechsler and former Chief Financial Officer Francis Joyce.

The Statement of Claim alleges that the company's 2005 earnings were misrepresented in a February 17, 2006 news release, and in subsequent IMAX disclosures, by recognizing revenue from theatres that had yet to open. It is further alleged that, as a result, IMAX's shares traded at artificially inflated prices.

On August 9, 2006, IMAX disclosed that it was being investigated by the U.S. Securities and Exchange Commission, that it had not met earnings targets and that it had identified a material weakness in the internal controls surrounding the analysis and recording of a complex film accounting transaction in the second quarter of 2006. Share prices fell 40 per cent that day alone, and by August 24, IMAX stock hit a low of $4.91.

"Bill 198 was passed to protect investors from exactly this kind of situation. Investors made decisions based on the information that the company provided and ended up seeing a significant decline in the value of their investment. A number of investors were hurt very badly," Charles Wright, lawyer and Siskinds class action expert, said.

Bill 198, called into force by the Ontario government on December 31, 2005, gives individual retail and institutional investors stronger protection against securities fraud. Under Bill 198, the investor is no longer required to prove reliance upon the defendants' misrepresentations. Prior to Bill 198, there was no statutory civil liability for misrepresentations made by companies outside a prospectus, and suing under the common law was difficult due to the need to prove detrimental reliance.

"Bill 198 will help ensure that people can invest in Canadian companies without fear of fraud. It was long overdue in Canada," said Dimitri Lascaris, also a Siskinds securities class action lawyer and expert. Mr. Lascaris added that Bill 198 still imposes hurdles to investor relief that are not imposed upon investors suing in the United States.

With offices in London, Toronto, Windsor and, through an affiliation with Siskinds Desmeules in Quebec City, Siskinds LLP is Canada's leading class action law firm. Siskinds was the first law firm in Canada to have a class action certified under Ontario's Class Proceedings Act 1992 (for the defective breast implants litigation).

Siskinds LLP is currently prosecuting a number of major securities cases including: the Molson Coors securities class action, the Royal Group securities class action, the FMF Capital Group securities class action, the Nortel derivative action, the Biovail securities class action and the CP Ships securities class action.

For persons residing outside of Québec, you can obtain more information on the IMAX class action, Bill 198 and shareholder rights by contacting:

- Charles Wright: (519) 660-7753

- Dimitri Lascaris: (519) 660-7844

Any residents of Quebec who purchased IMAX shares between February 17, 2006 and August 9, 2006 are encouraged to visit www.classaction.ca or to call (418) 694-2009.

For further information: Simon Hebert at (418) 694-2009

Source: newswire

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