Ryan & Maniskas said yesterday it was initiating a lawsuit against Patriot on behalf of the miner’s shareholders who bought into the company between October 2010 and July 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 2012, Patriot settled to pay $US7.5 million in civil penalties for selenium discharges from its mining activities in West Virginia.

Los Angeles-based firm Glancy Binkow & Goldberg also announced earlier this week that it had begun an investigation into possible SEC rules violations regarding Patriot’s accounting of selenium treatment-related costs.

Ryan & Maniskas said 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.

Response from legal entities to Patriot’s Chapter 11 filing was immediate.

Within days of being delisted from the New York Stock Exchange, a law firm specializing in the representation of high net worth and ultra-HNW clients launched an investigation on behalf of Patriot shareholders who sustained heavy investment losses.

Klayman & Toskes said it was focusing on alleged mismanagement of client portfolios given there were risk-management strategies that would have protected the value of a concentrated portfolio.

Patriot’s 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.