Halliburton Co. (HAL.N) has agreed to settle a securities fraud class action case for $100M. The case, brought in Dallas, accuses the oil field services providers of misrepresenting its possible liability in asbestos lawsuits and the benefits it expected from certain construction contracts, as well as a merger from nearly twenty years ago.
Lead plaintiff Erica P. John Fund Inc. filed the complaint in 2002 after the US Securities and Exchange Commission began investigating Halliburton’s accounting for revenue made from certain construction projects. The securities case accused the company of misleading investors when it purportedly understated its liabilities in the asbestos cases, overstated revenue from construction, and inflated the benefits of the Halliburton-Dresser Industries merger.
Former US Vice President Dick Cheney, who was chief executive of the company during the period at issue, settled the regulator’s charges against him for $7.5M in 2004. However, the lawsuit against the company has gone on for years.
The first time it reached the US Supreme Court in 2011, the court unanimously reversed a Fifth Circuit decision, which found that plaintiffs in securities cases must demonstrate during the class certification stage that their loses were a result of the wrongdoing allegedly committed by the defendants. The last time it was at the Supreme Court in 2014, the justices unanimously voted to impose new restrictions on securities class action cases brought by investors against publicly traded companies.
The court held that defendants are allowed to, at the preliminary class certification stage, rebut the presumption of reliance by the plaintiffs on an efficient market if the defendant is able to prove that the misrepresentation claimed did not impact the price of the stock at issue. The lawsuit was sent back to the lower courts.
Last year, U.S. District Judge Barbara Lynn certified the investor plaintiffs’ class and let them go after claims involving one of the six dates they’d accused Halliburton of making disclosures that remedied statements that were purportedly misleading. Halliburton appealed that decision to the Fifth Circuit once again.
Of the $100M, Halliburton will pay $54M out of its own pocket while its insurance company will pay the rest. As part of the agreement, Halliburton does not have to admit liability. A Dallas federal judge must still approve the settlement.
Our Texas securities fraud law firm represents investors throughout the state and the US.
Halliburton Settles Securities Fraud Lawsuit, The Wall Street Journal, December 23, 2016
Halliburton V. Erica John, US Supreme Court