Class action lawsuit filed by Aegean shareholder against the company, former president and ex-CFO

Former directors accused of violating Section 20(a) of the Securities Exchange Act.

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Updated on 06 Jun 2018 11:42 GMT

Plaintiff Nick Simco has filed a legal complaint - "individually and on behalf of others similarly situated" - against the bunker firm Aegean Marine Petroleum Inc, its former president and CEO Nikolas Tavlarios, and ex-CFO Spyros Gianniotis.

The lawsuit is a securities class action on behalf of all investors who purchased or acquired Aegean common stock between April 28, 2016, and June 4, 2018, defined as the 'class period'.

According to the plaintiff, the class period begins on April 28, 2016, because it is the date when Aegean filed a Form 20-F with the SEC announcing the company's results for the fourth quarter and year ended December 31, 2015.

For 2015, Aegean reported trade receivables of approximately $309 million, compared to trade receivables of around $354m in the previous year. And on May 16, 2017, Aegean announced trade receivables of approximately $503m for 2016.

The plaintiff claims that the financial statements for these two periods were "materially false and/or misleading because they misrepresented and failed to disclose the following adverse facts pertaining to the Company's business, operations, and prospects, which were known to Defendants or recklessly disregarded by them. Specifically, Defendants failed to disclose that: (i) Aegean had improperly accounted for an approximate $200 million of accounts receivable as of December 31, 2017; (ii) Aegean failed to maintain effective internal control over financial reporting, and (iii) as a result of the foregoing, Defendants' statements about Aegean's business, operations, and prospects, were false and misleading and/or lacked a reasonable basis".

The legal complaint alleges the defendants acted with scienter in that they knew that the documents and statements issued were "materially false and misleading".

The document also claims the defendants "engaged in a scheme to deceive the market and a course of conduct that artificially inflated the company's stock price, and operated as a fraud or deceit on acquirers of the Company's common stock".

Discussing this week's sudden drop in Aegean's share price, the plaintiff said: "The decline in Aegean's common stock price was a direct result of the nature and extent of Defendants' fraud finally being revealed to investors and the market. The timing and magnitude of the common stock price decline negates any inference that the loss suffered by Plaintiff and other members of the Class was caused by changed market conditions, macroeconomic or industry factors or Company-specific facts unrelated to the Defendants' fraudulent conduct."

On the issue of statutory safe harbor provided for forward-looking statements, the plaintiff argues: "[The] defendants are also liable for any false or misleading 'forward-looking statements' pleaded because, at the time each 'forward-looking statement' was made, the speaker knew the 'forward-looking statement' was false or misleading and the 'forward-looking statement' was authorized and/or approved by an executive officer of Aegean who knew that the 'forward-looking statement' was false."

The defendants are accused of violating Section 10(b) and Rule 10b-5 of the Securities Exchange Act. The allegations include: carrying out a plan to deceive the public and cause the plaintiff and other members of the class action to buy Aegean common stock at artificially inflated prices; employing devices and schemes to defraud; and making untrue statements of material fact and/or omitting to state material facts necessary to make the statements not misleading.

Individual defendants

The individual defendants are accused of violating Section 20(a) of the Securities Exchange Act.

The plaintiff claims that the individual defendants, Tavlarios and Gianniotis, were "directly or indirectly involved in drafting, producing, reviewing and/or disseminating the false and misleading statements and information alleged herein"; and "aware of or deliberately recklessly disregarded the fact that the false and misleading statements were being issued concerning the Company"; and also "approved or ratified these statements in violation of the federal securities laws".

The legal complaint adds: "Because of their positions and access to material non-public information available to them, each of these defendants knew that the adverse facts specified herein had not been disclosed to, and were being concealed from, the public, and that the positive representations which were being made were then materially false and/or misleading. The Individual Defendants are liable for the false statements pleaded herein, as those statements were each 'group-published' information, the result of the collective actions of the Individual Defendants."

"Each of the Individual Defendants are liable as a participant in a fraudulent scheme and course of business that operated as a fraud or deceit on purchasers of Aegean common stock by disseminating materially false and misleading statements and/or concealing material adverse facts. The scheme: (i) deceived the investing public regarding Aegean's business, operations, management and the intrinsic value of its securities and (ii) caused Plaintiff and other shareholders to purchase Aegean securities at artificially inflated prices."

Plaintiff Nick Simco is represented by Levi & Korsinsky, LLP, which is one of nine law firms to have already announced their intention to launch an investigation into Aegean on behalf of investors.