Law firms file class action suits against TOP Tankers
Four law firms have filed class action lawsuits against TOP Tankers, days after the company reported a third quarter net loss of $11 million in the wake of the resignation of its auditors, Ernst & Young.
The firms of Howard G. Smith of Bensalem, Pa.; Gardy & Notis of Englewood Cliffs, N.J.; Schiffrin & Barroway of Radnor, Pa.; and Kahn Gauthier Swick, of New Orleans, have all put out press releases in recent days saying they have filed class action lawsuits in the U.S. District for the Southern District of New York on behalf of shareholders who purchased stock in TOP Tankers between June 28, 2005 and Nov. 28, 2006.
TOP Tankers stock price closed Tuesday at $5.06. It had traded as high as $17.44 on March 17.
TOP said E&Y resigned during ongoing discussions over the accounting treatment of certain aspects of the sale and leaseback of 13 vessels that closed in March and April 2006.
TOP said it believed its accounting treatment of the sale and leaseback transactions was appropriate, and noted it was approved by the audit committee of its board of directors. And it said E&Y had previously reviewed the company's interim unaudited financial statements and the relevant earnings releases for the first and second quarters of 2006.
However, TOP said it had decided to restate its interim unaudited financial statements for the first and second quarters of 2006, in accordance with E&Y's later recommendations. It said it was holding talks with another major accounting firm to name it as TOP's auditor.
The Gardy & Notis press release said that TOP and certain of its officers and directors are charged in its lawsuit 'with issuing a series of materially false and misleading statements.'
It said on Nov. 29, TOP informed investors that Ernst & Young LLP, the company's independent auditors, had resigned over a disagreement related to its accounting for certain sale and lease back transactions, and that it would be forced to restate its interim financials for the entire half of 2006. The law firm said, 'the revelation of this news caused shares of TOP to fall almost 15 percent in the single trading day, to close just above $5 per share.'
The law firm alleges that 'TOP materially misrepresented and failed to disclose conditions that adversely affected the company throughout the class period in order to: (1) artificially inflate the price of company shares by deceiving shareholders concerning TOP's business, operations, management and the intrinsic value of TOP common stock.
'(2) Register for sale with the Securities and Exchange Commission millions of shares of TOP stock, and to provide shareholders with a massive $7.50 dividend per share — almost $40 million of which was paid to defendants and their families.
'(3) Permit Kingdom Holdings, an entity owned by the family of defendant Evangelos Pistiolis, to liquidate almost 900,000 company shares during the class period while in possession of material adverse information about the company.'