Texas District Court Denies Class Certification in IPO Securities Suit

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The US District Court for the Northern District of Texas recently denied class certification for a securities action arising from alleged false and misleading statements in Kosmos Energy Limited’s initial public offering.  

Investors sued Kosmos under the Securities Act of 1933, alleging that offering documents contained misrepresentations about the performance and expected production of an offshore oilfield in Ghana called “Jubilee Field,” which investors claim resulted in “hundreds of millions of dollars” in damages. The proposed Lead Plaintiff, a pension plan, filed a motion for class certification, arguing that it met certification requirements under Rule 23 and the Private Securities Litigation Reform Act. Defendants opposed the motion, arguing among other things that the Lead Plaintiff failed to possess a sufficient level of knowledge and understanding of the case. Defendants pointed to deposition testimony of the pension plan’s representative, which they argued revealed that the representative had never even seen Kosmos’ Registration Statement, the central document in the case, and that the representative was generally unfamiliar with the theories of the case. The District Court agreed with the Defendants and found that the Lead Plaintiff demonstrated insufficient knowledge of the case to act as the class representative. In denying class certification, the District Court emphasized that plaintiffs seeking class certification must produce “actual, credible evidence that proposed class representatives are informed, able individuals, who are themselves – not the lawyers – actually directing the litigation.”  

In re Kosmos Energy Ltd. Securities Litigation, No. 3:12-CV-373-B (N.D. Tex Mar. 19, 2014).

Topics:  Class Action, IPO, Securities Litigation

Published In: Business Torts Updates, Civil Procedure Updates, Securities Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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