Last week, a federal judge greenlighted a securities fraud class-action lawsuit against South African-based energy company Sasol Limited (NYSE: SSL) and five of its former executives, for misrepresentations and omissions about rising costs and construction delays at a mega-chemicals facility Sasol was building in Louisiana, according to attorneys at Hagens Berman.
Class Period: | Mar. 10, 2015 – Jan. 13, 2020 | ||
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U.S. District Judge for the Southern District of New York Hon. Jed S. Rakoff denied in large part the defendants’ motion to dismiss. The opinion held that the lead plaintiff’s complaint sufficiently pleads that the alleged misconduct violates Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. The suit was originally filed on Feb. 5, 2020.
The suit calls into scrutiny the actions of Sasol, along with former CEO David Edward Constable, former joint CEOs Bongani Nqwababa and Stephen Cornell, CFO Paul Victor and former executive vice president Stephan Schoeman. These defendants must now file an answer, admitting or denying each of the complaint’s allegations. The court also subsequently entered an order paving the way for the suit’s lead plaintiff and class members – investors who purchased Sasol American Depository Receipts (ADRs) between Mar. 10, 2015 and Jan. 13, 2020, inclusive – to be ready for trial on May 3, 2021.
In the 26-page motion to dismiss opinion, Judge Rakoff upheld investors’ claims based on defendants’ misrepresentations about the cost and construction for the Lake Charles Chemicals Project (LCCP). Specifically, the court rejected defendants’ argument that their statements were protected by the Private Securities Litigation Reform Act’s safe harbor provision, finding that the complaint adequately alleges that defendants’ cautionary language of potential cost overruns and delays was not meaningful and that defendants had actual knowledge of the falsity of their statements.
“Defendants’ argument utterly fails with respect to the alleged misrepresentations concerning the cost and schedule of the LCCP because ... the complaint alleges with particularity that Sasol’s public cost estimates and projected schedules hugely failed to account for already existing cost overruns and delays the day they were announced,” Judge Rakoff wrote.
On May 4, 2020, Hagens Berman was appointed lead counsel in the case, with Steve Berman, managing partner and co-founder of firm, serving as the lead trial counsel.
“We are pleased with this pro investor decision, which rejects the notion that corporate fraudsters can be immunized from knowingly making false projections to investors by merely including boilerplate cautionary language warning of risks that have already transpired,” Berman said. “This ruling also clears the way for us to begin obtaining discovery and prepare for trial in May 2021, during which we look forward to holding Sasol and its executives accountable for the significant losses they caused their investors.”
The lawsuit alleges that Sasol’s ADRs were artificially inflated because of misrepresentations and omissions about the estimated end-of-job cost and development of the LCCP. When the truth emerged over a series of disclosures, shareholders learned that: (i) the LCCP’s true cost was nearly $13 billion (or more than 60 percent than initially represented); (ii) beneficial operation at the LCCP would not occur until years after Sasol promised; (iii) according to Sasol’s board’s own account, “errors, omissions, and inaccuracies in the project cost estimate” stemmed from “inadequate control procedures,” “inappropriate conduct” and “an improper tone at the top;” (iv) a multitude of Sasol senior executives were fired or otherwise forced to leave; and (v) safety violations and risks materialized with a devastating explosion at the LCCP.
If you purchased Sasol ADRs and suffered significant losses, click here to discuss your legal rights with Hagens Berman.
Whistleblowers: Persons with non-public information regarding Sasol should consider their options to help in the investigation or take advantage of the SEC Whistleblower program. Under the new program, whistleblowers who provide original information may receive rewards totaling up to 30 percent of any successful recovery made by the SEC. For more information, call Reed Kathrein at 844-916-0895 or email SSL@hbsslaw.com.
Hagens Berman is a national law firm with nine offices in eight cities around the country and 88 attorneys. The firm represents investors, whistleblowers, workers and consumers in complex litigation. More about the firm and its successes is located at hbsslaw.com. For the latest news visit our newsroom or follow us on Twitter at @classactionlaw.
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