Hanover Compressor Company - Securities Class Action

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_______________
Copyright (c) 2001
Stanford Law School

Hanover Compressor Company Summary: On June 19, 2007, the Court entered the Orders granting the Motion For Approval of Plan of Allocation of Settlement Proceeds and the Motion For an Award of Attorneys Fees and Reimbursement of Expenses. Lastly, the Court entered the Final Judgment and Order of Dismissal with Prejudice.

On October 4, 2004, the plaintiff filed a Second Amended Complaint in violation of the Federal Securities Laws against remaining defendant PricewaterhouseCoopers LLP. The defendant filed a motion to dismiss on November 8, 2004. On August 26, 2005, a Memorandum and Recommendation was filed recommending that the PricewaterhouseCooper's motion to dismiss be granted in part and denied in part. On September 30, 2005, the Court entered an Order adopting the Memorandum and Recommendation. On February 16, 2007, a Stipulation of Settlement was filed. According to the Stipulation of Settlement, the settlement with PricewaterhouseCooper is in the amount of $2 million. On March 27, 2007, the Court entered a Partial Final Judgment and Order of Dismissal of §10(b) and Certain §11 Claims with Prejudice.

Pursuant to the Order and Final Judgment dated February 6, 2004, the Court certified the class period and approved the Securities Settlement as set forth in the Stipulation. The Consolidated Securities Action was dismissed with prejudice as to all defendants except PricewaterhouseCoopers. The Order and Final Judgment also released any remaining derivative and ERISA claims related to allegations in the Consolidated Securities Action. The case is still pending as to defendant PricewaterhouseCoopers LLP.

According to a Press Release dated December 9, 2003, Hanover Compressor Co. said that the company's proposed securities-related litigation settlement received preliminary court approval on December 5, 2003. In a filing with the Securities and Exchange Commission, Hanover Compressor said the court set the final hearing date for Feb. 6. In October, Hanover Compressor entered into a stipulation of settlement to fully and finally resolve all of the securities class actions, Employment Retirement Income Security Act class actions, and shareholder derivative actions previously filed against it. In May, Hanover Compressor announced the settlement agreement, under which it will make a cash payment of $30 million, and issue 2.5 million shares of common stock and a note worth up to $9.2 million.

According to a Press Release dated 5/13/03, the settlement of shareholder litigation involving Houston-based Hanover Compressor Company announced today contains groundbreaking reforms which add to the recent trend of shareholders demanding and obtaining more accountability from corporate boardrooms through shareholder litigation. The Hanover settlement represents the first time a class action has resulted in shareholders getting the power to fill board of directors' seats. It is also the first time a company has agreed to rotate its outside audit firm as part of a resolution of a shareholder class action.

The securities class action settlement provides for a recovery of more than $80 million in cash, stock and debt for those who suffered damage from the purchase of Hanover securities at inflated levels at a time when Hanover and its former senior insiders were disseminating false financial statements to investors. This settlement, if approved by the Court, will be one of the top twenty largest securities class action recoveries ever. The settlement includes a contribution of approximately $20 million from a large shareholder affiliated with former senior insiders who lead plaintiffs asserted had engaged in illegal insider trading. The securities action, led by five institutional and individual lead plaintiffs, alleged that defendants engaged in insider trading while causing Hanover to improperly report revenues and manipulate the value of its stock through "sham" transactions, which were similar to the now infamous off-the-books SPE deals used by Enron. Hanover restated its financial results in 2002 to correct the accounting misstatements contained in Hanover's 1999, 2000 and 2001 financial statements. Litigation pending in the U.S. District Court for the Southern District of Texas will continue against Hanover's accounting firm PricewaterhouseCoopers, which has been charged with engaging in illegal accounting practices that inflated Hanover's stock price, and which is not part of this settlement. The settlement also imposes restrictions on Hanover's directors and officers concerning accelerated vesting of their stock options and prohibits the use of derivative transactions to conceal insider stock sales.

The original complaint charges Hanover and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Hanover is a provider of natural gas compression, gas handling and related services in the United States and selected international markets. The complaint alleges violations of the federal securities laws arising out of defendants' issuance of false financial statements and other false and misleading statements about the Company's operating performance. The true facts, which were known by the defendants during the Class Period but concealed from the public, were: (a) the $16 million in revenue and $2.6 million in net income recognized in Q3 and Q4 associated with the Hampton Roads fabrication project should not have been recognized as it did not reflect the percentage of the project's completion; (b) Hanover's "former majority partner" in the Hampton Roads project was actually replaced on March 19, 2001, not July 2001; (c) defendants "paid off" the investor in Hampton Roads the sum of $1 million in exchange for the investor's signature on the sham transaction documents on or before Sept. 30, 2000, in order for the Company to use the same to inflate the Company's revenue and earnings as early as Q3 00; (d) defendants issued a "side letter" to the Hampton Roads investor offering to loan up to $40 million to the joint venture in order to induce the investor to enter into the agreement by Sept. 30, 2000; (e) in winter 2000, defendants actually knew that the Hampton Roads project completion date had been pushed out to 2003 or 2004, not 2001; (f) the Registration Statement omits the Hampton Roads project and incorporates the Company's false and misleading Q3 and Q4 2000 financial results; (g) the Company's financial statements for Q1-Q3 2001 were false in that the revenue and EPS were overstated and they failed to disclose the impact of the dubious Hampton Roads project. Moreover, these statements (in addition to the Registration Statement/Prospectus) concealed the fact that the investor in the transaction advised defendants in February 2001 that it sought to back out of the venture; and (h) on Feb. 6, 2001, the investor in Hampton Roads demanded a refund of his $4 million. Further, in a secret "behind-the-scenes" type transaction, the Company refused to refund the money directly to the investor. Instead, defendants forwarded the money to a company related to the investor so that the transaction would go uncovered. Finally, defendants arranged for the "related company" to issue a Promissory Note to Hanover in the amount of $4 million (the same amount as the refund) which it agreed in an oral "side agreement" not to insist upon payment.

INDUSTRY CLASSIFICATION:
SIC Code: 7359
Sector: Services
Industry: Rental & Leasing

COMPANY/ISSUER NAME:	Hanover Compressor Company
COMPANY/ISSUER TICKER:	HC
COMPANY WEBSITE:	http://www.hanover-co.com

FIRST IDENTIFIED COMPLAINT IN THE DATABASE

Pirelli Armstrong Tire Corporation Retiree Medical Benefits Trust, et al. v. Hanover Compressor Company, et al.

COURT: S.D. Texas	DOCKET NUMBER: 02-CV-0410
JUDGE NAME: Hon. Vanessa D. Gilmore
DATE FILED: 02/04/2002	SOURCE: Business Wires
CLASS PERIOD START: 11/08/2000	CLASS PERIOD END: 01/28/2002
TYPE OF COMPLAINT: Unamended/Unconsolidated
PLAINTIFF FIRMS IN THIS OR SIMILAR CASE:
Barrett, Johnston & Parsley 217 Second Avenue, N, Nashville, TN, 37201 (voice) 615.244.2202, (fax) , Branstetter, Kilgore, Stranch & Jennings 227 Second Ave. North, 4th Floor, Nashville, TN, 37201-1631 (voice) 615.254.8801, (fax) 615.255.5419, Milberg Weiss Bershad Hynes & Lerach LLP (San Diego, CA) 600 West Broadway, 1800 One America Plaza, San Diego, CA, 92101 (voice) 800.449.4900, (fax) , support@milberg.com Schwartz, Junell, Campbell & Oathout, LLP 909 Fannin - Suite 2000, Houston, TX, 77010 (voice) 713.752.0017, (fax) 713.752.0327, _____________________________________________ TOTAL NUMBER OF PLAINTIFF FIRMS: 4

DOCUMENTS FOR THE FIRST IDENTIFIED COMPLAINT
Complaint For Violation Of The Federal Securities Laws
Type: Complaint		Date on the document: 02/04/2002
Milberg Weiss - Hanover Compressor Corporate Governance Settlement Term Sheet
Type: Other		Date on the document: 05/13/2003

REFERENCE COMPLAINT

Pirelli Armstrong Tire Corporation Retiree Medical Benefits Trust, et al. v. Hanover Compressor Company, et al.

COURT: S.D. Texas	DOCKET NUMBER: 02-CV-0410
JUDGE NAME: Hon. Vanessa D. Gilmore
DATE FILED: 09/05/2003	SOURCE: Business Wires
CLASS PERIOD START: 05/04/1999	CLASS PERIOD END: 12/23/2002
TYPE OF COMPLAINT: Consolidated and/or Amended
PLAINTIFF FIRMS NAMED IN COMPLAINT:
Lerach Coughlin Stoia Geller Rudman & Robbins LLP (San Diego) 655 West Broadway, Suite 1900, San Diego, CA, 92101 (voice) 619.231.1058, (fax) 619.231.7423, Milberg Weiss Bershad Hynes & Lerach LLP (San Diego, CA) 600 West Broadway, 1800 One America Plaza, San Diego, CA, 92101 (voice) 800.449.4900, (fax) , support@milberg.com Schwartz, Junell, Campbell & Oathout, LLP 909 Fannin - Suite 2000, Houston, TX, 77010 (voice) 713.752.0017, (fax) 713.752.0327, _____________________________________________ TOTAL NUMBER OF PLAINTIFF FIRMS: 3

DOCUMENTS FOR THE REFERENCE COMPLAINT
Amended Complaint For Violation Of Federal Securities Laws
Type: Complaint		Date on the document: 9/5/2003
Notice Of Pendency And Settlement Of Derivative Actions
Type: Notice		Date on the document: 12/05/2003
Notice Of Pendency Of Class Action And Proposed Class Action Settlement
Type: Settlement		Date on the document: 12/05/2003
Notice Of Pendency Of ERISA Class Action And Proposed ERISA Class Action Settlement
Type: Notice		Date on the document: 12/05/2003
Order and Final Judgment
Type: Order		Date on the document: 02/06/2004
Order And Final Judgment
Type: Other		Date on the document: 2/6/2004
Order Approving The Securities And ERISA Plans Of Allocation
Type: Order		Date on the document: 02/06/2004
Order Awarding Settling Plaintiffs' Counsel's Fees And Reimbursement Of Expenses, Reimbursement Of Certain Lead Plaintiffs' Time And Expenses And Award To ERISA Named Plaintiff
Type: Order		Date on the document: 02/06/2004
Second Amended Complaint For Violation Of The Federal Securities Laws
Type: Complaint		Date on the document: 10/04/2004
[Proposed] Order Preliminarily Approving Settlement, Certifying A Class For Settlement Purposes, And Providing For Notice
Type: Order		Date on the document: 02/16/2007
Stipulation of Settlement
Type: Settlement		Date on the document: 02/16/2007
Partial Final Judgment And Order Of Dismissal Of §10(b) And Certain §11 Claims With Prejudice
Type: Order		Date on the document: 03/22/2007
Notice Of Pendency And Settlement Of Class Action
Type: Notice		Date on the document: 03/26/2007
Proof of Claim and Release
Type: Other		Date on the document: 03/26/2007
Final Judgment And Order Of Dismissal With Prejudice
Type: Order		Date on the document: 06/15/2007
Order Granting Unopposed Motion For An Award Of Attorneys' Fees And Reimbursement Of Expenses
Type: Order		Date on the document: 06/15/2007
U.S. District Court Civil Docket
Type: Docket		Date on the document: 06/15/2007

OTHER DOCUMENTS

Case Name and/or Number:
Type:		Date on the document:

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