's Sept.29 revelation that it had received a U.S. Department of Justice subpoena forinformation about its accounting practices related to oil and natural gasleases has motivated several law firms to file class action suits against thecompany.
Inan SEC filing for an $850 million note issuance, Chesapeake not only said ithad received the subpoena on its accounting practices, but said it hadpreviously received separate subpoenas on its purchase and lease of oil andnatural gas rights and royalty payment practices.
NewYork-based Pomerantz LLP announced Oct. 4 that it had filed a class actionlawsuit in the U.S. District Court for the Western District of Oklahoma againstChesapeake, hoping to recover damages for alleged violations of federalsecurities laws.
"Thecomplaint alleges that throughout the class period, defendants made falseand/or misleading statements, as well as failed to disclose material adversefacts about the company's business, operations, and prospects," the firmsaid. "Specifically, defendants made false and/or misleading statementsand/or failed to disclose that: (i) Chesapeake had improperly accounted for theacquisition and classification of oil and gas properties; (ii) Chesapeakelacked effective internal financial controls; and (iii) as a result of theforegoing, Chesapeake's public statements were materially false and misleadingat all relevant times."
TheOklahoma City-based firm Federman & Sherwood also filed suit Oct. 4,accusing Chesapeake "of issuing a series of material or falsemisrepresentations to the market which had the effect of artificially inflatingthe market price."
Chesapeakeshares, which fell 9.33% after the news Sept. 29, have rebounded in recentdays. Shares of company stock were up 7.9%, to $6.87 per share in middaytrading on the NYSE on Oct. 5. A message to the company seeking comment was notimmediately returned.