An energy company recently had a securities class action lawsuit dismissed by a district court, however the lawsuit's story doesn't end there.
After the district court dismissed the class action lawsuit against Houston American Energy for failing to sufficiently plead the requirements of securities fraud, investors then appealed, and the appellate court reversed the district court's dismissal of the lawsuit. The appellate court then remanded the case back to the district court for further proceedings.
Any shareholders who are looking for more information about the future proceedings in the district court have the ability to contact the company by phone. Further details on the decision can be found on its website.
Lawsuit filed in 2012
The class action lawsuit against Houston American Energy was initially filed by law firm Lieff Cabraser Heimann and Bernstein, LLP.
This litigation included all shareholders who acquired stock in the company during the class period between March 29, 2010 and April 18, 2012. The lawsuit was due to allegations that the leaders at Houston American Energy violated the Securities Exchange Act of 1934. This was due to the company making a series of statements about business operations, finances and prospects that may have misled investors, or been false.
A major issue with its statements was that the company did not inform shareholders about its dealings with two formations in Colombia. These formations, named C7 and C9, were not producing to a sufficient level, making them not viable for commercial purposes. Additionally, there was an issue with the company's financial controls and other internal problems.
The company noted on March 1, 2012 that it had delayed drilling in the Tamandua #1 well, located in Columbia. When this occurred, its stock fell more than 35 percent to $7 per share at the end of trading that day. This was a decline of $3.84 per share.
Slightly more than one month later, the company's leader noted that it was stopping all testing and finishing of both C7 and C9 formations for the Tamandua #1 well, as there was damage in the formations when the drilling occurred. The energy firm also noted that the Securities and Exchange Commission started an investigation to see if any federal securities laws were violated during this period.
When these details surfaced, the company's stock fell approximately $1.24 per share to $2.25 per share on April 19, 2012. The slide was nearly 36 percent.