A federal securities-fraud class action against oil and natural gas provider Enservco brought in the U.S. District Court for the District of Colorado was dismissed in March 2024. Faegre Drinker defended Enservco, two of its officers and other defendants in the case, which began after Enservco voluntarily restated its financials in 2022. Shortly thereafter, shareholders alleged that the company’s accounting controls were ineffective, and that the company had knowingly or recklessly made false or misleading statements to make itself more attractive to potential refinancers in violation of Section 10(b) and 20(a) of the Securities Exchange Act of 1934.
After a full briefing on a motion to dismiss, the U.S. District Court for the District of Colorado concluded that the plaintiffs did not meet their burden in showing that Enservco acted with any intent to defraud, given the company voluntarily brought the misstatements to light and corrected them. At most, the company’s restatement of its financials suggested “a motive to remedy problems, not conceal them.” Therefore, the motion to dismiss was granted.
