On February 20, 2015, the Alabama Supreme Court affirmed the order of the Circuit Court of Jefferson County, Alabama dismissing claims asserted by Walter Energy, Inc. against investor Julian A. Treger, his firm Audley Capital Advisors, LLP and other associated investment entities related to a purported “pump and dump” scheme executed by the Audley defendants related to Walter Energy stock. In late 2010, Walter Energy purchased Western Coal Corporation. Walter Energy alleged in the trial court that the Audley defendants initiated a “pump and dump” scheme on July 17, 2011, when Treger sent a letter to Walter Energy stating that his firm was gauging interest of others in acquiring Walter Energy and suggesting that Walter Energy could be sold at a share price much above its current share price. The letter also advised that other institutional shareholders in Walter Energy would support an acquisition of the company. The letter requested a response by August 5, 2011, but the Audley defendants released the letter publicly on July 18, 2011, before receiving any response. The share price of Walter Energy subsequently rose dramatically and the Audley defendants sold approximately 900,000 shares of Walter Energy stock in the time immediately afterwards. There were also a number of news articles related to possible acquisitions of Walter Energy. There have been, however, no formal bids to acquire Walter Energy or any other attempted sort of takeover. Walter Energy further alleged that the Audley defendants interfered with the opportunity for raising $350 million by way of a debt offering by suggesting that the Walter Energy board of directors would decline any merger opportunities based on their own self-interest.

Walter Energy filed suit alleging claims under the Alabama Securities Act § 8-6-1, et seq. and intentional interference with contractual or business relations, among others. The Audley defendants moved the trial court to dismiss the claims, and the trial court granted the Audley defendants’ motion to dismiss and dismissed all of the claims asserted against them by Walter Energy with prejudice.

Walter Energy appealed, challenging the trial court’s dismissal of its Alabama Securities Act claim and its intentional interference with contractual or business relations claim. The Alabama Supreme Court affirmed the decision of the Jefferson County, Alabama Circuit Court holding: (1) the facts presumed to be true indicated that the Audley defendants had engaged in conduct that appeared to fall within the list of activities prohibited by § 8-6-17(a); (2) the Audley defendants had failed to allege that there was an offer to buy Walter Energy stock in this case or that there was an offer to sell made and received in Alabama; (3) the mere fact that a transaction occurred on the New York Stock Exchange or any other national securities exchange does not bring that transaction within the scope of the Alabama Securities Act; (4) the fact that the transactions involved the stock of an Alabama-based corporation was not sufficient to allow application of the Alabama Securities Act; (5) Walter Energy’s allegation that the Audley defendants improperly interfered with its relationship with other shareholders and its relationship with lenders in its tortious interference claim failed because the Audley defendants were not “strangers” in that (a) a decision made by the corporation’s board of directors concerning debt securities is “presumably made in the best interest of the corporation’s shareholders, and any gain or loss resulting from such a business decision will ultimately be for those shareholders’ benefit or to their detriment” and “the Audley defendants, as shareholders in Walter Energy, have a direct interest in any business relationships” between Walter Energy and its lenders and (b) the Audley defendants were not strangers to the relationship between Walter Energy and the other shareholders in the corporation because “the shareholders in the corporation literally share ownership of the corporation with each other, and their economic interests are necessarily interwoven.”