Superior Offshore International, Inc. ("Superior Offshore" or the Company) provides sub-sea construction and commercial diving services to the oil and gas industry.
Several class actions were filed in the United States District Court for the Eastern and Western Districts of Louisiana and the Southern District of Texas about the issue below.
The Complaint charges Superior Offshore, certain of its officers and directors, and the Company's underwriters -- collectively, "Defendants" -- with including, or allowing the inclusion of, materially false and misleading statements in the Registration Statement and Prospectus issued in connection with the IPO, in violation of the Securities Act of 1933.
Specifically, the Complaint alleges that on April 20, 2007, Superior Offshore and Company insiders sold over 10 million shares of common stock to the public, raising gross proceeds in excess of $152 million. However, unbeknownst to investors at the time of the IPO, the Company's core business was not performing according to plan, its core market in the Gulf of Mexico was declining, and Defendants would be forced to immediately transform and reorganize the Company, and enter into new, untested markets such as Deep Water and International Operations. Moreover, at the time of the IPO, Superior Offshore was not operating according to plan, such that the Company's sales already had been, and foreseeably would continue to be, adversely affected.
Beginning on August 14, 2007 -- after Defendants and other Company insiders liquidated over $49 million of their personally held shares -- Superior Offshore revealed the truth about the Company, including that the problems existing at the time of the IPO would result in extremely disappointing results for the foreseeable near-term, and would force Defendants to reorganize and transform the Company. Later, on November 14, 2007, shares again declined after Defendants belatedly revealed that the Company was operating even below its recently revised forecasts, and that its core business was operating even worse than previously disclosed. On January 9, 2008, the Company announced that it was suspending its prior substantially downward revised guidance.
Following these belated disclosures, shares of Superior Offshore fell from their offering price of $15 per share to approximately $3.50 per share as a direct result of Defendants' belated disclosures.
On April 21, 2008, the Court granted the motion to transfer the first filed case from the United States District Court for the Eastern District of Louisiana to the Southern District of Texas. The case was then ordered consolidated with Lead Case In re Superior Offshore International, Inc. Securities Litigation, Civil Docket 08-CV-687, in the Southern District of Texas. On May 20, 2008, Judge Nancy F. Atlas granted the motion to appoint Charles Ognar as lead Plaintiff and approved Kahn Gauthier Swick, LLC as lead Counsel. On July 21, 2008, the lead Plaintiff filed a Consolidated Amended Class Action Complaint. On September 25, 2008, the Defendants filed motions to dismiss the Consolidated Amended Class Action Complaint.
On January 12, 2009, District Court Judge Nancy F. Atlas signed the Memorandum and Order denying the Defendants’ motions to dismiss the Consolidated Amended Class Action Complaint. On February 8, 2010, a motion to certify the class was denied. On June 17, 2010, Judge Nancy F. Atlas signed the Order staying and administratively closing the case. The stay of litigation was lifted on October 25, 2010, due to possible settlement. On January 3, 2011, the proposed settlement was filed with the Court, in the amount of $1.9 million in cash. A stipulation was signed by the judge that same day, dismissing with prejudice the company Defendant from the action. The settlement is between the Plaintiffs and the individual Defendants and the underwriter Defendants. The settlement was preliminarily approved on January 5, 2011. The final settlement hearing was set for May 10, 2011.
On May 25, 2011, the settlement was approved, and the action was dismissed with prejudice.
On June 23, 2011, the objector to the May 25th Final Judgment and Order of Dismissal filed a Notice of Appeal. On July 5, 2011, the Court filed the Notice of Assignment for the appeal to the Fifth Circuit Court of Appeals, but on August 29, 2011, it was noted in the Court docket that the appeal was dismissed.
