NEW YORK-Dec. 9, 2005- LAWFUEL- The Law News Network -The law firm of Milberg Weiss Bershad & Schulman LLP announces that a class action lawsuit was filed on December 7, 2005, on behalf of purchasers of the securities of Stone Energy Corporation (NYSE: SGY) between June 17, 2005 and October 6, 2005 inclusive (the “Class Period”), seeking to pursue remedies under the Securities Exchange Act of 1934 (the “Exchange Act”).
If you bought the securities of Stone Energy between June 17, 2005 and October 6, 2005 and sustained damages, you may, no later than January 30, 2006, request that the Court appoint you as lead plaintiff. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member’s claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as “lead plaintiff.” Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. You may retain Milberg Weiss Bershad & Schulman LLP, or other counsel of your choice, to serve as your counsel in this action.
The action, numbered 05-2109, is pending in the United States District Court for the Western District of Louisiana against Stone Energy, David H. Welch (CEO), Kenneth H. Beer (CFO), D. Peter Canty (former CEO), and James H. Prince (former CFO) A copy of the complaint filed in this action is available from the Court or can be viewed on Milberg Weiss’s website at: http://www.milbergweiss.com
The complaint alleges that defendants violated accounting rules and guidelines relating to the valuation of oil reserves. Stone Energy is a Louisiana-based company which, according to its press releases, engages in “the acquisition and subsequent exploration, development, operation and production of oil and gas properties.” One of the key factors to a proper evaluation of companies like Stone Energy is the accurate and reliable information on oil and gas reserves and the expected future cash flows generated from these reserves. During the Class Period, defendants reported Stone Energy’s proved reserves in SEC filings and press releases assuring investors that these reserves were reported in accordance with SEC guidelines. In response, the stock traded at over $62 per share during September, 2005. On October 6, 2005, defendants revealed for the first time that an internal reserve review conducted during the third quarter showed that Stone Energy would need to take significant downward revisions to the Company’s previously reported reserves. In response to the news, Stone stock plunged from $56.0 to $48.14 on unusually high trading volumes of over 4.1 million shares, far greater than the average trading volume of around 560,000 shares.
The bad news, however, was far from over. On November 8, 2005, defendants announced that Stone Energy will restate results from 2001 through the second quarter of 2005. The Company revealed that an outside investigation indicated that Stone Energy may have violated regulatory requirements for reserve booking and that management set a “tone of optimism and aggressiveness” regarding reserves. Two days later, the Company announced that the SEC commenced an informal inquiry into the reserve revision. On December 5, 2005, defendants admitted that the Company did not follow SEC guidelines with respect to reserves and revealed that Stone Energy received an inquiry from the Philadelphia stock exchange about trading activity before its reserve estimate revision in October. As a result of defendants’ fraud, investors have sustained significant losses. In fact, the full extent of investors losses has not yet been revealed, as the magnitude of the restatement has not yet been disclosed.
Milberg Weiss Bershad & Schulman LLP (http://www.milbergweiss.com) is a firm with over 120 lawyers with offices in New York City, Los Angeles, Boca Raton, Delaware, and Washington, D.C. and is active in major litigations pending in federal and state courts throughout the United States. Milberg Weiss has taken a leading role in many important actions on behalf of defrauded investors, consumers, and others for nearly 40 years. Please contact the Milberg Weiss website for more information about the firm. If you wish to discuss this action with us, or have any questions concerning this notice or your rights and interests with regard to the case, please contact the following attorneys:
5200 Town Center Circle, Suite 600
Boca Raton, Florida 33486
Steven G. Schulman
One Pennsylvania Plaza, 49th fl.
New York, NY, 10119-0165