Magnum Hunter (MHR) Securities Fraud Class Action
Magnum Hunter securities fraud class action summary
One sure fire red flag for accounting problems is when a public company fires its outside, independent audit firm. Thats just what Magnum Hunter (MHR) did on April 16, 2013 when it dismissed PricewaterhouseCoopers (PwC). PwC raised systemic concerns about Magnum Hunter’s financial controls and accounting procedures. Magnum Hunter appears to stand by its accounting practices and disputes PwC’s conclusions about the accounting controls in place at the company. This securities fraud class action then centers around the underlying accounting practices at Magnum Hunter, the internal financial controls in place and senior executives knowledge of any potential deficiencies.
Magnum Hunter (MHR) explores for oil and natural gas in North America. Magnum Hunter may be best known for its exploration efforts in unconventional shale resource locations, including Marcellus Shale, Utica Shale, Eagle Ford Shale, Pearsall Shale and Williston Basin/Bakken Shale. As an exploration company, its central value proposition may well be the size of “provable reserves” it owns (or leases) as this provable reserves are treated fundamentally better on the balance sheet than say “unproven” reserves. Much of PwC’s concerns appear to focus on whether Magnum Hunter properly accounted for reserves as “provable” verses “unprovable”, although PwC did raise a host of accounting issues.
Magnum Hunter Shareholders loss $192.7 million in one week
On April 9, 2013, Magnum stock traded at $4.00. MHR shares closed at $2.80 per share on April 17, 2013. That drop equates to roughly $192.7 million in lost market value or just under 30% of the entire value of the company.
Magnum Hunter (MHR) shareholder loss class action lawsuit
This investigation focuses on the underlying facts that lead to the February 16, 2013 Magnum Hunter disclosure regarding the above cited accounting errors. Did management know of these problems in real time? What controls were in place? Where was the audit committee of the board of directors? Complete the web form on this page if you are a Magnum Hunter shareholder and would like to learn more about our investigation.
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