A California judge said he was ready to approve a $7.6 million settlement between Pacific Coast Oil Trust and several bank underwriters after a lawsuit was filed by investors claiming they were misled by the company.
The judge for the case determined the settlement was “fair and reasonable.” The deal allowed defendants to withdraw from the settlement if an undisclosed number of class members opted out, known as a “blow provision.”
The settlement will resolve claims brought by investor Thomas Welch in July 2014. Welch claimed that before the company’s initial and secondary public offerings, the trust and two of its top officials had understated the risks that would impact their ability to issue stable or increasing profit payouts.
In addition to the trust, the suit named former CEO Halbert Washburn and Randall Breitenbach and several banks as defendants, including Barclays Capital, Citigroup, JP Morgan, UBS, and several more.
The proposed class consisted of investors who purchased Pacific Coast Oil Trust “units” during the May 2012 IPO and the Sept. 2013 secondary offering. According to the plaintiffs, because the trust only made information regarding fluctuating oil prices public after the IPO, prices declined substantially.
Generally speaking, oil and gas trusts like the one at issue here are a type of commodity investment in which an investor purchases a trust unit for the right to future net profits from a set of wells.
These trusts, on the other hand, have an incentive to maintain monthly profit distributions at least at a stable rate to satisfy the unitholders. Because the trust failed to disclose the risks and uncertainties known to them at the time, the investors brought suit.
Call a Los Angeles Securities Attorney Today
If you invested with Pacific Coast Oil Trust or have questions about an investment that you think you were misled by, you may have certain legal rights which require your immediate attention.
Contact an experienced Los Angeles securities attorney today for a consultation to discuss your rights and options.