As reported in the Company’s FORM 10-K For The Fiscal Year Ended December 31, 2004, on November 30, 2004, four lawsuits filed in the same court containing essentially the same allegations were voluntarily dismissed with prejudice by the lead counsel for the plaintiffs. The cases were never certified as a class action, and the plaintiffs voluntarily dismissed their cases by means of a voluntary stipulation of dismissal with prejudice, without financial consideration and with mutual release of all claims.
The complaint alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder.
Specifically, the complaint alleges that by the start of the Class Period, unbeknownst to investors, Clean Harbors was experiencing difficulties integrating the operations of Safety-Kleen Corp's Chemical Services Division, which it had just acquired. Moreover, the integration process was distracting the Company from its core business, thereby causing the Company to experience declining results.
The complaint further alleges that notwithstanding the foregoing difficulties, throughout the Class Period, defendants projected increasing revenues and earnings for the Company, which caused a dramatic increase in the price of Clean Harbors common stock. While the stock was trading at these levels, certain Clean Harbor insiders sold their personally held Clean Harbors common stock to the unsuspecting public. In addition, defendant McKim engaged in a forward sale of 200,000 shares of his stock, which permitted him to lock in gains in his stock but not suffer from any decline in the price of Clean Harbors stock. Then, on 14 May 2003, Clean Harbors surprised the market by announcing that its EBITDA for 1Q 2003 was below the quarterly minimum required by certain covenants in the Company's loan agreements and that the Company would have to renegotiate the terms of its agreements with its lenders. In response to this announcement, the price of Clean Harbors stock plummeted from $12.89/share to $10.9/share on extremely heavy trading volume. The true extent of the problems at Clean Harbors were not finally revealed until 14 Aug 2003, when it announced that it would miss its earnings targets for 2Q 2003 and that it was being negatively impacted by a variety of factors. Following this announcement, the price of Clean Harbors common stock declined further to $6.23/share.