On Aug. 5, 2022, the court granted an order for distribution of class action settlement funds. The case has been settled.
This was a class action on behalf of investors who purchased SAExploration (“SAEX” or the “Company”) securities from March 15, 2016 through February 7, 2020 (“Class Period”), seeking damages caused by SAEX’s and certain of its senior executives’ violations of the Securities Exchange Act of 1934.
During the Class Period, Defendants attested to the accuracy of SAEX’s reported earnings and affirmed the Company’s internal controls, processes and procedures for financial reporting. Moreover, the Company stated that its financial statements included the results of all “variable interest entities,” or entities controlled by SAEX. But according to the lawsuit, SAEX allegedly misrepresented and concealed its relationship with data library firm Alaska Seismic Ventures (ASV), an entity for which SAExploration purportedly performed seismic services in 2015-2016. Specifically, ASV was a variable interest entity in which SAEX had a controlling financial interest, thereby requiring SAEX to consolidate ASV in its reported financial results.
The truth began to emerge on Aug. 15, 2019, when the Company announced that the SEC was conducting an investigation into certain accounting matters that arose in 2015-2016. The Company also announced that its Board of Directors had established a Special Committee of independent directors to oversee the Company’s own internal investigation and response to the SEC. The Company further disclosed it would restate its previously issued financial statements for fiscal years 2015-2018 and delay filing its 10-Q for the quarter ended June 30, 2019. The Board's decision to restate these financial statements arose from the Company's re-evaluation of its relationship with ASV, which the Company now claimed was a variable interest entity. As a result of these admitted accounting violations, the Company further disclosed that material weakness exists in the Company's internal control over financial reporting and that disclosure controls and procedures were ineffective during the Class Period.
On this news, the Company’s shares fell 34%, damaging investors. SAEX’s CEO Jeff Hastings left his post, and Brent Whiteley, the Company’s CFO, was terminated. Moreover, the company revealed additional details regarding its internal investigation, divulging further wrongful conduct by Hastings and Whiteley.
In August 2021, Hagens Berman secured a $3.5 million settlement on behalf of investors, resolving these allegations.
