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When investors analyze an oil company, the first item
they probably scrutinize is the company’s oil reserves.
So, obviously, if a company announces that its actual
reserves are less than they have previously stated,
this is bad news for investors in that company. As
you probably recall, Royal Dutch Shell had reserve
evaluation problems a few years ago.
The latest oil company with a reserve evaluation
problem is Stone Energy Corporation (NYSE: SGY).
Stone Energy Corp. engages in the acquisition,
exploration, development, operation, and production
of oil and gas in the Gulf of Mexico (GOM), various
basins of the Rocky Mountains, and Williston.
On October 8, 2005, Stone Energy stunned the market
when it announced that it intended to take a significant
reserve write-down. This was the result of an internal
investigation into its reserve practices. It has been
alleged that previously the Company was materially
overstating its financial results by overvaluing its oil
reserves through improper and aggressive reserve
methodologies. The market reacted sharply to this
news and Stone Energy dropped almost 14% in
heavy trading.
More bad news would follow. On November 8, 2005,
Stone Energy issued a press release announcing that
it will restate its financial statements for the periods
from 2001 to 2004 and for the first six months of 2005.
Investors who purchased between June 17, 2005 and
October 6, 2005, are affected.
If you are an affected investor in Stone Energy or the
three companies described below that are under
investigation (Universal American Financial Corp,
Interlink Electronics Inc. and NL Industries), you
may wish to contact us to discuss your options.
Cases Under Investigation
Universal American Financial Corp (NasdaqNM: UHCO)
While the Company was touting its future, Company
executives and insiders sold over $200 million in stock.
On October 28, 2005, investors realized the Company’s
future prospects weren't so rosy after a 22%
year-over-year decline in net income was announced.
The market reacted strongly and UHCO stock
plummeted by 33%. Investors who purchased between
February 16, 2005 and October 28, 2005 are affected.
Interlink Electronics Inc. (NasdaqNM: LINK)
On March 9, 2005, Interlink announced it would restate
its financial results for the first three quarters of 2004
to correct several instances of improper accounting.
Then, on November 2, 2005, Interlink shocked investors
a second time by announcing it was again restating its
financial statements -- this time for all of 2003 and 2004
and for the first two quarters of 2005. This news shocked
the market and Interlink shares plummeted 40%.
Investors who purchased LINK between April 24, 2003
and November 1, 2005 are affected.
NL Industries (NYSE: NL)
On November 14, 2005, NL Industries disclosed that it
will restate its financial statement for the year ended
December 31, 2004 and the quarters ended March 31, 2005
and June 30, 2005. Investors who purchased NL stock
between May 4, 2004 and November 14, 2005 may be
affected.
Now with respect to settled cases. If you are an affected
investor – you purchased any of these stocks during the
relevant class period, you may wish to contact the claims
administrator to obtain additional information. Remember,
if you don’t submit your claim form, you won’t receive your
proportionate share of recovery.
Metromedia Fiber Network, Inc. (MFNX)
Class Period: January 8, 2001 to July 2, 2001
Claims Deadline: January 27, 2006
Claims Administrator: Gilardi
Micromuse, Inc. (MUSE)
Class Period: January 18, 2001 to May 17, 2004
Claims Deadline: January 9, 2006
Claims Administrator: A.B. Data
Healthtronics Surgical Services (HRTN)
Class Period: January 4, 2000 to July 28, 2003
Claims Deadline: December 31, 2005
Claims Administrator: Garden City
Contact info: info@gardencitygroup.com or 800.327.3664
Quality Distributions, Inc. (QLTY)
Class Period: November 6, 2003 to January 18, 2005
Claims Deadline: December 23, 2005
Claims Administrator: Garden City
Contact info: info@gardencitygroup.com or 800.327.3664
Again, if you are affected by a settled case, then you should
contact the claims administrator (rather than us). However,
if you are an affected investor in any of the companies under
investigation, you many wish to contact us so that you
can consider your options.
Likewise, if you happen to be aware of corporate restatements
or other financial fraud -- especially if you're a victim --
you're encouraged to contribute to the Sleuth by giving your
own tip-offs at www.securitiessleuth.com or by e-mailing
info@securitiessleuth.com. You can also call Mark McNair
at 877-511-4717. If you have a friend or colleague you
think would benefit from The Sleuth, please pass along
this issue and ask them to sign up at
www.cartville.com/app/join.asp?MerchantID=47994.
Warmest regards,
Mark McNair
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