An energy company recently announced that the securities class action lawsuit against it was dismissed.
LINN Energy, LLC, noted that the litigation against it – filed in the U.S. District Court for the Southern District of New York – is no longer outstanding. It was initially entered in July 2013 against the board of directors and other officers by those who took part in the company's initial public offering. There still is an option for those individuals to appeal the ruling, which would take place in the U.S. Court of Appeals for the Second Circuit.
"We are very pleased with the court's decision and believe that the ruling supports our position that the lawsuit was without merit," said Mark Ellis, chairman, president and CEO at LINN Energy.
Lawsuit filed in separate court
A law office noted last year that the litigation was entered due to statements by the company's leaders that may not have been accurate.
Levi and Korsinsky, LLP, explained that the class action lawsuit was filed in the U.S. District Court for the Southern District of Texas against LINN Energy, and included all shareholders who acquired interests in the company during the class period between April 28, 2011 and July 1, 2013.
The allegations in the lawsuit centered around the board of directors at LINN making a number of statements that were either false or misleading regarding its financial condition. Specifically, there were concerns that LINN Energy had inaccurate accounting for its hedging strategy. There also were issues related to a possible overstatement of cash flow for its shareholders, as the company used financial measures that were non-GAAP. Another issue was that the company did not have a rising production of energy when considering the financial output it underwent.
Second lawsuit notes similar issues
Another law office explained that the initial filing had a longer class period due to potential securities law violations.
Law firm Lieff Cabraser Heimann and Bernstein, LLP, said that the initial filing against LINN Energy was for the class period between Feb. 25, 2010 and July 3, 2013. This was due to the company's leaders allegedly violating the Securities Exchange Act of 1934, due to not addressing the financial risks in the company and still posting similar or higher cash distributions.
Additionally, the Securities and Exchange Commission started an inquiry regarding the company's financial issues in July 2013.