Mammoth Energy Services, Inc.
- Company Name
- Mammoth Energy Services, Inc.
- Stock Symbol
- Class Period
- October 19, 2017 to June 5, 2019
- Motion Deadline
- August 6, 2019
- Western District of Oklahoma
The complaint charges Mammoth and certain of its officers with violations of the Securities Exchange Act of 1934. Mammoth provides oilfield services to government-funded utilities, private and public investor-owned utilities, co-operative utilities, independent oil and natural gas producers, and land-based drilling contractors in North America.
The complaint alleges that throughout the Class Period, defendants made false and misleading statements and/or failed to disclose adverse information regarding Mammoth’s business and operations. Specifically, defendants failed to disclose that, instead of going through a competitive RFP process to obtain contracts, one of Mammoth’s subsidiaries, Cobra Acquisitions LLC, had been improperly steered work by a Federal Emergency Management Agency (“FEMA”) Deputy Regional Administrator, which had allowed Cobra to obtain two infrastructure contracts with the Puerto Rico Electric Power Authority (“Prepa”) that totaled over $1.8 billion. As a result of this information being withheld from the market, Mammoth securities traded at artificially inflated prices, with its stock price reaching a high of more than $40 per share during the Class Period.
On May 24, 2019, The Wall Street Journal published an article stating that a FEMA Deputy Regional Administrator who oversaw FEMA’s response to damage from Hurricane Maria was under investigation by the Department of Homeland Security (“DHS”) and had been relieved of her duties and placed on administrative leave over allegations she had improperly steered work to Cobra. According to the article, the DHS Inspector General was investigating, among other things, “whether Cobra gained an improper advantage in the contracting process. . . . [A]s Prepa’s spending on contractors skyrocketed last year, utility officials raised concerns internally about Cobra’s rates and why the company was doing so much of the power restoration work . . . . Cobra has billed for more than $1.3 billion in emergency work through May 10, more than half the utility’s total emergency spending since the hurricane . . . .” On this news, the price of Mammoth shares fell over 10% over the next three trading days to close at $10.99 per share on May 29, 2019.
Then on June 5, 2019, The Wall Street Journal published another article, entitled “Puerto Rico Grid Contractor Caught Up in the Federal Probes,” reporting that the FBI had “opened a related criminal inquiry” into the origin of Cobra’s contracts with Prepa. On this news, the price of Mammoth shares fell $5.09 per share, or more than 45%, over the next two trading days to close at $6.11 per share on June 6, 2019.