Deadline looms for Patriot investor suit

INVESTORS wanting to join a class action lawsuit again embattled producer Patriot Coal have until November 21.
Deadline looms for Patriot investor suit Deadline looms for Patriot investor suit Deadline looms for Patriot investor suit Deadline looms for Patriot investor suit Deadline looms for Patriot investor suit

Courtesy Patriot Coal

Donna Schmidt

California-based Shareholders Foundation said those wishing to be lead plaintiffs in the suit, filed earlier this year over alleged securities law violations, should become active by the November 21 deadline.

Those impacted include investors with a substantial investment in Patriot Coal shares obtained between October 21, 2010, and July 6, 2012.

The complaint alleges Patriot issued materially false and misleading statements on its business prospects, which improperly capitalized costs and overstated financial results.

Specifically, the suit alleges Patriot violated generally accepted accounting principles, and Securities and Exchange Commission rules, by failing to properly account for costs associated with court-ordered selenium treatment requirements.

In January, Patriot settled to pay $US7.5 million in civil penalties for selenium discharges from its mining activities in West Virginia. Several legal entities have since alleged the miner might have failed to properly account for costs associated with court-ordered selenium treatments.

According to reports, Patriot admitted its consolidated financial statements for the years 2010 and 2011 “should no longer be relied upon” and had to be restated to recognize losses related to the cost of the water-treatment installations.

Patriot filed for Chapter 11 bankruptcy protection on July 9, blaming cancelled contracts, rising costs and plummeting coal prices for its woes. It tried reducing production, but that proved unsuccessful.

Its Chapter 11 filing was made well after the US stock market closed July 9, but earlier speculation had sent the company’s stock into a 72% free-fall – from $2.19 on July 6, to 61c on July 9.

Shortly after, it delisted from the New York Stock Exchange.

The producer’s case is in the US Bankruptcy Court for the Southern District of New York (Manhattan). The location of the proceedings has been a significant point of contention for those involved, including the United Mine Workers and the Department of Justice, for several months.

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