China North East Petroleum Holdings Ltd. (CNEP) must face a shareholder lawsuit accusing the company of inflating proven oil reserve numbers, a U.S. appeals court ruled.
The U.S. Court of Appeals in Manhattan today reversed a lower court’s dismissal of the case, finding that shareholders’ losses weren’t necessarily remedied by a recovery in the stock price.
“A share of a stock that has regained its value after a period of decline is not functionally equivalent to an inflated share that has never lost value,” U.S. Circuit Judge Chester Straub wrote for the three-judge panel.
If I remember correctly, the first court agreed with NEP that since the plaintiff was later able to sell at a profit, then no loss had occurred. I was flabbergasted at this poor logic. If the management's actions or negligence reduced the value of the company to less than WHAT IT WOULD HAVE BEEN, then it seems to me that a loss has occurred.
Must be some life left in the corpse if they're still willing to pay their lawyer. I would have expected Wang to just ignore U.S. courts after being dark this long. How is anyone ever going to collect their two and a half cents settlement if the company isn't answering the phone?
I would think going dark and abandoning shareholders *also* has no relevance on whether or not they lied about reserves two years ago, but I would love to hear what the judge has to say about this.
Now who was it here that kept insisting Ralph E. Davis' reserve reports were credible? I may be able to beat you over the head with the lawsuit if shareholders actually win this time.
It could be that the lawyer responded without having been prompted (or paid) by NEP - in the hopes that NEP will continue to defend themselves, and they will continue to gain fees.
They are about as wild-eyed optimistic as DG.
“The decision will have zero impact on the case,” Michael Coffino, a lawyer for China North East Petroleum, said in a phone interview today. “All the theories and arguments remain intact and we’re looking forward to a dismissal on other grounds in the near future.”
I wonder if the lawyer knows that the company does not exist anymore