Yukos Oil Company ("Yukos" or the Company) is one of Russia's leading vertically integrated oil companies, and one of the world's largest non-state owned oil companies.

The original Complaint charges Yukos, certain of its officers and directors and its accounting advisors with violations of the Securities Exchange Act of 1934.

Specifically, the Complaint alleges that Defendants created a complex network of shell companies to evade taxes on the production, refining and sale of oil and oil products. These shell companies were registered in territories with preferential tax treatment to enable these companies to receive special tax exemptions in order to minimize Yukos' tax liability. Since these shell companies were not separate legal entities, as Yukos maintained control over the operations of these companies, Yukos was required to recognize the full amount of the receipts associated with these transactions for its own tax purposes and was not entitled to the preferential tax treatment these shell companies were granted. Accordingly, Yukos' tax liability was materially understated and its earnings were materially overstated in violation of GAAP.

Defendants' scheme began to unravel in October 2003 when the market learned that Russian authorities had arrested the Company's largest shareholder and CEO, Defendant Mikhail Khodorkovsky, and had charged him with fraud, embezzlement and evading taxes on hundreds of millions of dollars that was owed to the government. At this time, the Russian authorities also announced that they would pursue criminal prosecutions against other senior Yukos officials. Ultimately, Yukos, which has been audited by the Tax Ministry of Russia for its fiscal year 2000 tax returns, will be required to pay approximately $3.3 billion for 2000 alone due to its understatement of its tax liability, including interest and penalties. The Tax Ministry intends to audit Yukos' books for 2001-2003 based upon the same charges. Yukos could ultimately be expected to pay upwards of $10 billion to the Tax Ministry for Defendants' involvement in the illegal tax evasion scheme. As a result of the revelation of Defendants' wrongdoing, investors have suffered massive damages as the price of Yukos' securities plummeted.

In a press release dated April 3, 2006, a lawsuit filed in the United States accusing Russian oil major Yukos of violating securities laws by evading taxes was partly dismissed last week by a federal judge in New York, although several aspects of the lawsuit were allowed to proceed. Judge William Pauley dismissed claims brought against Group Menatep, the parent company of Yukos, by Plaintiffs Roxwell Holdings Ltd. and Parsimony Ltd. However, he allowed claims against Yukos and the Company's former chief financial officer, to proceed.

According to a press release dated October 25, 2006, a federal judge in Manhattan has dismissed an investor lawsuit against Yukos that alleged the Russian company concealed from the investing public the potential risk from its tax strategies and from the political activities of its top executive. In an opinion, U.S. District Judge William H. Pauley III in Manhattan dismissed the investor lawsuit against Yukos, once Russia's largest oil company. In March, the judge allowed the claims over its tax strategies to proceed, but dismissed the other allegations.