According to a press release dated February 24, 2011, a class action complaint was filed against Oilsands Quest Inc. ("Oilsands Quest" or the "Company") (AMEX:BQI) and certain of the Company's officers in the U.S. District Court for the Southern District of New York. The action for violations of the Securities Exchange Act of 1934 is brought on behalf of those purchasing the common stock and other publicly-traded securities of Oilsands Quest between August 14, 2006 and July 14, 2009, inclusive (the "Class Period"), including Oilsands Quest's "Exchangeable Shares" offered as consideration for the minority interest in OQI Sask on August 14, 2006; Oilsands Quest's "units" first publicly offered on December 5, 2007 at $5.00 per unit; Oilsands Quest common stock shares publicly offered on December 5, 2007 on a flow-through basis at $6.11 ($6.17 CDN) per share; and Oilsands Quest's "units" first publicly offered on May 1, 2009 at $0.85 per unit.
Specifically, the complaint filed in the action charges that, during the Class Period, Oilsands Quest and certain of its officers and directors overstated the value of the Company's assets by more than $136 million in violation of Generally Accepted Accounting Practices ("GAAP").
As alleged in the complaint, on August 14, 2006, Oilsands Quest acquired the minority interest in its operating subsidiary, OQI Sask, that the Company did not already own. The Complaint alleges that Oilsands Quest's Class Period financial reports and statements issued thereafter were false and misleading in that: (a) defendants failed to properly account for Oilsands Quest's acquisition of the minority interest of OQI Sask in August 2006, materially overstating the value of OQI Sask throughout the Class Period; (b) Oilsands Quest's financial statements overstated the value of the Company's interest in OQI Sask and were presented in violation of GAAP throughout the Class Period; and (c) contrary to defendants' Class Period assurances, the Company's internal controls were inadequate to prevent it from improperly inflating the value of its assets.
On July 14, 2009, the Company issued a release disclosing that the Company's FY 2007, FY 2008 and Q-1, Q-2 and Q-3 2009 financial reports should no longer be relied upon, that its previously issued financial reports would be restated, and that Oilsands Quest's internal controls were deficient throughout the Class Period. Meanwhile, the complaint alleges, as a result of defendants' false statements, Oilsands Quest's stock price traded at artificially inflated levels during the Class Period, trading as high as $6.75 per share on June 23, 2008, but that as the truth seeped into the market, the Company's shares were hammered by massive sales, sending them down 87% from their Class Period high.
A similar purported class action complaint was also filed in the District of Colorado.
According to the Order signed by Judge Jed S. Rakoff on May 23, 2011, the Court hereby grants the motion and appoints the St. Lucie Group as lead plaintiffs. An amended consolidated complaint in this action must be filed by no later than May 27, 2011.
An Amended Complaint was filed on June 2, 2011. The Amended Complaint expanded the class period and named certain company directors as defendants in the action. The defendants responded by filling motions to dismiss in June, July, and August 2011.
On September 16, 2011, Judge Jed S. Rakoff terminated several motions to dismiss. Specifically, the judge granted the motion of TD Securities, but denied the motions of all the other defendants.
On March 29, 2012, the Court issued an Order staying this case. On October 19, 2012, by Order of the Court, the stay was lifted as to the individual former officers and directors of Oilsands Quest and as to defendant McDaniels & Associates Consultants Ltd. This Court's stay remains in effect as to Oilsands Quest.
On March 4, 2013, the parties entered into a Stipulation of Settlement. This Settlement was preliminarily approved by the Court on March 5.
On July 31, 2013, the Court issued an Order granting final approval of the proposed Settlement, approving the Plan of Distribution, and awarding attorneys' fees and expenses. The Clerk of the Court is directed to enter final judgment.