Weatherford International Ltd., an oilfield services company, will pay $120 million to settle a securities class action alleging it misled investors about its financial condition leading up to a 2012 disclosure that it had overstated earnings and done the arithmetic wrong on its taxes. The proposed settlement was revealed last month. In June, the company agreed in principle to settle claims brought by lead Plaintiffs Anchorage Police & Fire Retirement System and Sacramento City Employees’ Retirement System. But the details of the arrangement weren’t disclosed at that time. The settlement, if approved, would end a three-year battle over whether the company deceived investors into thinking business was booming before revealing its earnings and tax problems.
The Plaintiffs’ suit, first filed in March 2012 and amended that September, alleged Weatherford misled investors about its financial condition and filed false financial statements between March 2011 and July 2012 that resulted in the oilfield services and products company overstating its earnings by $500 million from 2007-2010. The company also continued to fraudulently understate its tax expenses in three subsequent restatements, according to the Plaintiffs, citing a February 2012 whistleblower report on alleged improper practices in Weatherford’s tax department.
Weatherford engaged Latham & Watkins LLP and Ernst & Young LLP to conduct an investigation following the whistleblower allegations, which ultimately found no intentional wrongdoing. But Latham had actually found evidence of fraud, which it then told Ernst about, despite the companies making public announcements to the contrary, the Plaintiffs alleged.
In a related case, the company and several executives agreed to pay $52.5 million to settle claims brought by Plaintiffs including American Federation of Musicians and Employers’ Pension Fund and Georgia Firefighters’ Pension Fund in 2014.
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