WILMINGTON, Del.--(Rigrodsky & Long, P.A. announces that a complaint has been filed in the United States District Court for the Eastern District of Missouri on behalf of all persons or entities that purchased the securities of Patriot Coal Corporation (“Patriot Coal” or the “Company”) (OTC QB: PCXCQ) between October 21, 2010 and July 6, 2012, inclusive (the “Class Period”), alleging violations of the Securities Exchange Act of 1934 against certain of the Company’s officers (the “Complaint”).)--
If you purchased shares of Patriot Coal during the Class Period, and wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact Timothy J. MacFall, Esquire or Peter Allocco of Rigrodsky & Long, P.A., 825 East Gate Boulevard, Suite 300, Garden City, NY at (888) 969-4242, by e-mail to email@example.com, or at: http://www.rigrodskylong.com/investigations/patriot-coal-corporation-pcxcq.
Patriot Coal, a Delaware corporation headquartered in St. Louis, Missouri, is a leading producer of thermal coal in the eastern United States, with operations and coal reserves in the Appalachia and the Illinois Basin coal regions. The Complaint alleges that throughout the Class Period, defendants made materially false and misleading statements regarding the Company’s business operations, financial condition and prospects. Specifically, the Complaint alleges that the defendants violated Generally Accepted Accounting Principles (“GAAP”) and U.S. Securities and Exchange Commission (“SEC”) rules because they failed to properly account for the costs associated with the court-ordered remediation obligations related to certain of the Company’s selenium water treatment requirements. In particular, defendants capitalized these costs instead of recording them as expenses, thereby overstating the Company’s financial results. As a result of defendants’ false and misleading statements, the Company’s stock traded at artificially inflated prices during the Class Period.
According to the Complaint, the remediation costs arose after Judge Robert Chambers, of the U.S. District Court for the Southern District of West Virginia, ordered in August 2010 that Patriot Coal spend tens of millions of dollars to clean up selenium pollution at two of its surface coal mines in West Virginia. Sometime in February 2012, the SEC began questioning the Company’s accounting for certain of its court-ordered selenium water treatment obligations. In response to the comments received from the SEC, the defendants were forced to reveal that the Company’s previously issued consolidated financial statements for the years ended December 31, 2011 and December 31, 2010 should no longer be relied upon. Further, the defendants admitted that it was necessary to restate the Company’s previously issued consolidated financial statements to accrue a liability and recognize a loss for the estimated costs of installing the court-ordered water treatment facilities. This restatement increased Patriot Coal’s asset retirement obligation expense and net loss by $23.6 million and $49.7 million for the years ended December 31, 2011 and 2010, respectively.
In addition to announcing the restatement on May 8, 2012, the Company also disclosed that management identified a control deficiency in its internal control over financial reporting associated with the accounting treatment for two of the water treatment facilities affected by the court’s August 2010 order. On this news, shares in Patriot Coal declined from a close of $5.53 on May 8, 2012 to $5.31 on May 9, 2012, on volume of over 12 million shares. One week later, the Company recanted its 2013 forecast which caused shares in Patriot Coal to decline again from a close of $4.83 on May 14, 2012 to $3.94 on May 15, 2012, on volume of over 19 million shares.
On May 22, 2012, the Company publicized a letter sent by its Chief Executive Officer, defendant Richard M. Whiting, to the Company’s employees. The letter expressed optimism stating that the Company was poised for “future growth.” However, the release of this letter caused shares in Patriot Coal to decline from a close of $3.36 per share on May 21, 2012 to $2.18 per share on May 22, 2012, on volume of over 86 million shares.
Finally on July 9, 2012, the Company announced that it and substantially all of its wholly owned subsidiaries have filed voluntary petitions for reorganization under Chapter 11 of the Bankruptcy Code. On this news, shares in Patriot Coal declined over 72% from a close of $2.19 on July 6, 2012 per share to $0.61 per share on July 9, 2012, on volume of over 38 million shares.
If you wish to serve as lead plaintiff, you must move the Court no later than November 21, 2012. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member’s claim is typical of the claims of other class members, and that the class member will adequately represent the class. Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. Any member of the proposed class may move the court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member.
While Rigrodsky & Long, P.A. did not file the Complaint in this matter, the firm, with offices in Wilmington, Delaware and Garden City, New York, regularly litigates securities class, derivative and direct actions, shareholder rights litigation and corporate governance litigation, including claims for breach of fiduciary duty and proxy violations in the Delaware Court of Chancery and in state and federal courts throughout the United States.
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