SAN DIEGO and HOUSTON, May 20, 2013 /PRNewswire/ -- Shareholder rights attorneys at Robbins Arroyo LLP announce that a shareholder of Magnum Hunter Resources Corp. (NYSE: MHR) filed a federal securities fraud class action complaint in the U.S. District Court for the Southern District of New York. The complaint alleges that Magnum Hunter and certain of its most senior executives violated the Securities Exchange Act of 1934 between January 17, 2012 and April 22, 2013 (the "Class Period").
Magnum Hunter Accused of Making False and Misleading Statements Regarding Financial Condition and Internal Controls
The complaint alleges that, throughout the Class Period, Magnum Hunter and certain of its senior executives issued a series of false and/or misleading statements regarding the reliability of the company's publicly released financial statements and internal controls. Specifically, the complaint alleges that certain officers and directors made false and/or misleading statements regarding: (i) the company's material weaknesses in valuing its oil and gas properties; (ii) the company's calculation of its oil and gas reserves; (iii) the company's position with respect to certain tax matters; (iv) the company's accounting of its acquisition of NGAS Resources, Inc.; and (v) the company's compliance with certain debt covenants. As a result, the company has filed multiple corrections with the U.S. Securities and Exchange Commission, restating second quarter 2012 financial results to increase its quarterly losses reported by nearly $4 million and disclosed defects in its internal controls that it intentionally understated. In addition, Magnum Hunter incurred a $65 million impairment charge in December 2012, and was nearly de-listed by the NYSE in January 2013 for failing to hold an annual shareholder meeting.
The Truth Is Revealed and Magnum Hunter Stock Price Falls Drastically
On April 16, 2013, Magnum Hunter disclosed ongoing pervasive defects in internal controls over financial reporting and material weaknesses in its internal financial and tax reporting capacities. Further, the company announced the dismissal of its independent auditor, PricewaterhouseCoopers LLP ("PwC"), after PwC advised the company of material weaknesses in its internal accounting controls and demanded further investigation. PwC was the second independent auditor that Magnum Hunter fired in connection with its fiscal 2012 audit, rendering the company unable to provide audited financial statements for fiscal 2012 in a timely manner. Then, on April 22, 2013, the company disclosed that PwC advised the company that it discovered information that it believed to have a material impact on the fairness or reliability of Magnum Hunter's consolidated financial statements and that the issue remained unresolved at the time of PwC's dismissal. On this news, Magnum Hunter's stock price fell more than 67% from the Class Period high of $7.71 to close at $2.50 per share on April 22, 2013. As a result, the company lost more than $878.5 million in market capitalization.
If you purchased or otherwise acquired Magnum Hunter stock during the Class Period and wish to serve as lead plaintiff, you must act no later than June 24, 2013. To discuss your shareholder rights, please contact attorney Darnell R. Donahue at (800) 350-6003, firstname.lastname@example.org, or via the shareholder information form on the firm's website.
Robbins Arroyo LLP is a nationally recognized leader in securities litigation and shareholder rights law. The firm represents individual and institutional investors in shareholder derivative and securities class action lawsuits, and has helped its clients realize more than $1 billion of value for themselves and the companies in which they have invested. For more information, please go to http://www.robbinsarroyo.com.
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SOURCE Robbins Arroyo LLP